On 30 August 2026, the Inland Revenue Board of Malaysia (Lembaga Hasil Dalam Negeri Malaysia, HASiL) announced that the Government had agreed to raise the e-Invoice implementation threshold from RM1 million to RM3 million, with effect from 1 September 2026. The media release, reference HASiL/2026/08/30-44, followed the Prime Minister’s National Day address the same day. HASiL puts the number of businesses that now benefit from an exemption at more than 1.1 million.
The same day, HASiL issued Version 4.8 of the e-Invoice Guideline, which rewrites the exemption in section 1.6.1(e) and adds two new paragraphs, 1.6.9 and 1.6.10. On 4 September it updated its general e-Invoice FAQ, and that document answers the questions the release left open: whether a business that already started issuing e-Invoices can stop, whether it needs to apply, and whether anyone who ignored their 1 January or 1 July 2026 start date is now in trouble.
The short answers are yes, no, and no. The longer answers are below, because the threshold is not the whole test, and getting the wrong side of it is a section 120 offence.
The test has four parts
Section 1.6.1(e) of Version 4.8 exempts taxpayers with annual turnover or revenue below RM3,000,000 (the Malay text reads “pendapatan tahunan atau jualan tahunan”; the FAQ renders it as annual turnover or revenue, and this article follows the FAQ). Section 1.6.10 says that exemption applies to every category of taxpayer, individuals, partnerships, companies and cooperatives included, and then takes it away from three groups:
- A taxpayer with a non-individual shareholder, or the equivalent, whose annual turnover or revenue is at least RM3 million.
- A taxpayer that is a subsidiary of a holding company with annual turnover or revenue of at least RM3 million.
- A taxpayer with a related company or joint venture with annual turnover or revenue of at least RM3 million.
“Related company” takes the meaning in section 2 of the Promotion of Investments Act 1986. HASiL’s FAQ, at question 103, gives the working test: a company holding at least 20 per cent of the issued share capital of another is treated as related for e-Invoice purposes, and a corporate shareholder below 20 per cent still makes the companies related if it controls the operations.
So a small company is exempt only if its own turnover is below RM3 million and it passes all three structural tests. HASiL’s FAQ works this through with a subsidiary that turned over RM400,000 in 2022 and is still required to implement, because its parent is over the line.
The FAQ examples settle three questions that come up in most Malaysian family groups:
A common individual shareholder does not make companies related. Question 103(b): where the same individual owns two companies, they are not related companies for e-Invoice purposes. One can be over RM3 million and mandated, the other under and exempt.
A common director does not either. Question 103(c): the test is shareholding and control at shareholder level. A director with no shares in either company does not link them.
A sole proprietor’s businesses are added together. Question 102: the RM3 million test for a sole proprietor covers every sole proprietorship business registered in that person’s name. Three small businesses turning over RM750,000, RM820,000 and RM1.54 million are one taxpayer at RM3.11 million, and that taxpayer is in.
Which year’s turnover counts
The phased timetable in section 1.5 has always been set by one year: the annual turnover or revenue in the statement of comprehensive income of the audited financial statements for financial year 2022, or for a business without audited accounts, the annual income reported in the tax return for year of assessment 2022. If the 2022 accounting period was not twelve months, the figure is pro-rated.
The exemption works off the same base year, and then keeps testing. FAQ question 12 sets out the sequence for a business that was trading in 2022 and was under RM3 million that year:
- Under RM3 million in YA2022 and the three structural tests are passed: exempt.
- Turnover then reached or exceeded RM3 million in YA2023, YA2024 or YA2025: implement from 1 July 2026.
- Turnover reaches or exceeds RM3 million in YA2026 or later: implement from 1 January of the second year after the year of assessment in which it crossed.
The 1 July 2026 date is what HASiL calls the “concessionary e-Invoice implementation date”. A business that was under RM3 million in 2022 but fails one of the structural tests is not exempt and had to implement from that date.
Businesses that started between 2023 and 2025 follow the same logic from their first year (question 13). A business that starts in 2026 or later and is under RM3 million in its first year is exempt, and if it later crosses the line, it implements from 1 January of the second year after the crossing (question 14). HASiL’s own example: a stall that opens on 1 January 2026, turns over RM308,000 that year and RM3.14 million in 2027, implements from 1 January 2029.
Already issuing e-Invoices and now under the line: HASiL says you may discontinue, and you do not need to ask
This is the question most businesses in the RM1 million to RM3 million band have, and the FAQ answers it four times over, with names.
Question 17: a standalone company with RM850,000 turnover in 2022 and RM2 million in 2024, mandated from 1 July 2026 and issuing since then. Is an application needed to stop? “No separate application or prior approval from IRBM is required for taxpayers who are eligible to enjoy the exemption.” The company “may discontinue issuing e-Invoices immediately.”
Question 20: a sole proprietor with RM2.6 million turnover in 2022, mandated from 1 January 2026 and issuing since then. Same answer. She may discontinue immediately. If her turnover later reaches or exceeds RM3 million, she implements from 1 January of the second year after the year of assessment in which it does.
Question 19 covers the business that was issuing, discovered some e-Invoices were missed, and wondered whether it now had to use the e-Invoice Special Voluntary Disclosure Programme to put them right. It does not. HASiL’s answer is that the company “is not required to participate in the e-Invoice SVDP and may discontinue issuing e-Invoices immediately.”
And questions 15 and 16 cover the business that was mandated from 1 January or 1 July 2026 and simply never started. For a sole proprietor at RM2.9 million and a company at RM800,000 rising to RM1.7 million, HASiL’s answer is the same: “no e-Invoice compliance actions or penalties will be imposed.”
Every one of those answers carries the same condition: the taxpayer is under RM3 million and meets the section 1.6.10 criteria. A subsidiary of a large group that stopped issuing on the strength of the headline has not become exempt. It has stopped complying.
Two things do not change for a business that stops. Section 82(1)(b) of the Income Tax Act 1967 still requires serially numbered receipts for all transactions where annual gross takings exceed RM150,000 (FAQ question 109). And section 1.6.2 of the Guideline says the receipts and documents an exempt business issues are what its customers will use as proof of expense, so they need to be issued properly.
The ratchet: once you are in, you stay in
The threshold cuts one way. Question 104 of the FAQ asks whether a business that has been mandated because it crossed RM3 million can be exempt again if turnover later falls below the line. The answer is no: “No exemption will be granted after the mandatory implementation year has been determined, and taxpayers are required to continue issuing e-Invoices even if their total annual turnover or revenue do not exceed RM3 million in the subsequent years.”
HASiL’s worked example is a fertiliser company that passes RM3 million during 2026, is mandated from 1 January 2028, and drops back under RM3 million in 2027. It stays in.
A business mandated under the old RM1 million line, still under RM3 million, can leave now. A business that crosses RM3 million from here on enters permanently. The timing rule for entry, from question 100, is 1 January of the second year following the year of assessment in which turnover reaches RM3 million. A company that crosses in 2026 implements on 1 January 2028. That gap is the planning window, so watch a company running at RM2.7 million during the year rather than discover the crossing after it.
What the rest of the market does with an exempt supplier
The exemption changes only what the small business itself issues.
Section 1.6.3 of the Guideline says a seller supplying goods or services to an exempt person still issues e-Invoices on its own timetable. If you are a mandated business selling to a sub-RM3 million company, nothing changes on your side.
Buying from an exempt business is the other direction. Under section 1.6.2, the receipt or other document the exempt business issues is used as proof of expense for tax purposes. FAQ question 105 adds that exempt taxpayers are not required to issue consolidated e-Invoices or self-billed e-Invoices, and question 107 says a business that has implemented e-Invoicing cannot compel a counterparty that has not reached its own mandatory date to issue one. A large customer’s procurement policy is not a source of law.
One carve-out. Where a sub-RM3 million business sells through a local e-commerce platform, the obligation to issue the e-Invoice sits with the platform provider, and the small business must still give the platform the details it needs (questions 106 and 110). The exemption covers the seller’s own direct sales, not the platform’s.
Exempt businesses may still use the system. Section 1.6.6 of the Guideline and the media release both encourage exempt businesses to take part voluntarily, and section 1.5 confirms a taxpayer may implement early regardless of its turnover band. FAQ question 24 lists the incentives on the table, including a tax deduction of up to RM50,000 a year, from YA2024 to YA2027, for ESG-related expenditure incurred by MSMEs, which HASiL says includes consultation fees for customised software to implement e-Invoicing.
For everyone still in: the rules that did not move
If your turnover is RM3 million or more, or you fail a structural test, the change is not yours. What applies to you is unchanged, and the announcement will be read by some as a general relaxation, so here it is again.
The phased timetable in section 1.5 of Version 4.8 still ends with the up-to-RM5 million band on 1 January 2026, and the FAQ’s own table repeats it. The interim relaxation period, during which consolidated e-Invoices are accepted in place of individual ones, runs until 31 December 2027 for that band, whether the implementation date was 1 January 2026 or 1 July 2026 (question 113). The e-Invoice Special Voluntary Disclosure Programme runs from 7 July 2026 to 31 December 2027, using document versions SVDP 1.2 and SVDP 1.3 (question 123). And failure to issue an e-Invoice remains an offence under section 120(1)(d) of the Income Tax Act 1967, carrying a fine of not less than RM200 and not more than RM20,000, or imprisonment of up to six months, or both, for each non-compliance (question 41).
The Specific Guideline was also reissued, as Version 4.9 on 7 September 2026. Its amendment summary lists changes to paragraphs 3.5.4, 3.5.7 and 8.8, to the buyer-detail tables, and to Appendices 1, 2 and 5. The three paragraphs concern the identification details of individual buyers and sellers, including the case where an individual gives either a TIN or a MyKad, MyTentera, MyPR or MyKAS number, but not both. None of the listed amendments touches the exemption. If your integration handles individual buyers, read those three paragraphs; if you were hoping the Specific Guideline had something to say about the threshold, it does not.
A correction to something we wrote
On 19 August 2026 we published an article on the MyInvois validation deadlines and the SVDP. It said that every turnover band was now live and that “a business turning over RM2 million is in exactly the same validation regime as one turning over RM200 million”. That was accurate on the day. From 1 September 2026 it is not: a standalone RM2 million business that passes the section 1.6.10 tests is exempt. The field validation rules in that article are unchanged for everyone who remains in.
What to do this month
If you are under RM3 million and issuing e-Invoices: run the three structural tests before you stop. Corporate shareholder at RM3 million or more, parent at RM3 million or more, related company or joint venture at RM3 million or more. Any one of them keeps you in. If you pass all three, you may stop now, without applying, and keep issuing proper receipts.
If you are under RM3 million and never started: the same three tests decide whether the FAQ’s “no compliance actions or penalties” answer is yours. If it is, note the date you confirmed it and the figures you relied on, because no application or approval is involved and the record will be yours alone.
If you are a group: list every subsidiary under RM3 million and check it against the parent’s turnover. Most of them are still in. The FAQ is explicit that a RM400,000 subsidiary of a mandated parent implements on 1 July 2026.
If you are near the line: a crossing in 2026 means 1 January 2028. Watch the number during the year, not after it, and treat the entry as permanent.
If you buy from small suppliers: their receipts are your proof of expense. Do not demand e-Invoices they are not required to issue, and do not issue self-billed e-Invoices in their place.
If you would like help running the section 1.6.10 tests across a group, or deciding whether a business near the line should implement now rather than later, we can work through the numbers with you.
Sources: Inland Revenue Board of Malaysia (HASiL), media release HASiL/2026/08/30-44, “Ambang Pengecualian Pelaksanaan e-Invois Dinaikkan”, 30 August 2026; e-Invoice Guideline Version 4.8, 30 August 2026, sections 1.5 and 1.6; e-Invoice Specific Guideline Version 4.9, 7 September 2026, amendment summary and paragraphs 3.5.4, 3.5.7 and 8.8; HASiL general e-Invoice FAQ, updated 4 September 2026, questions 10 to 20, 24, 41, 98 to 113 and 123. All retrieved 16 September 2026. This article is general information current as at 16 September 2026 and is not tax or legal advice. The Guideline states that its exemptions are reviewed and updated from time to time, and the FAQ is revised without notice, so confirm the live position on hasil.gov.my before acting.