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e-Invoice exemption for small businesses, explained
Short answer
From 1 September 2026, LHDN exempts taxpayers with annual turnover or revenue below RM3 million from issuing e-Invoices, including self-billed e-Invoices. The exemption covers sole proprietors, partnerships, companies and co-operatives, but not businesses tied to a non-individual shareholder, holding company, related company or joint venture at RM3 million or more. Record keeping still applies.
What changed on 1 September 2026
On 30 August 2026, the Government announced that the e-Invoice exemption threshold would rise from RM1 million to RM3 million, effective 1 September 2026. HASiL confirmed it in a media statement the same day, and LHDN published e-Invoice Guideline Version 4.8 with the new rule.
The rule sits in section 1.6.1(e) of the guideline: taxpayers with an annual turnover or revenue of less than RM3,000,000 are exempt from issuing e-Invoices. The exemption also covers self-billed e-Invoices, which matters if you buy from individuals or overseas suppliers.
For most owner-run businesses in Malaysia, this means e-Invoice is no longer compulsory. It is still allowed. The Government encourages small businesses to join voluntarily, and LHDN keeps the MyInvois Portal and MyInvois app available for anyone who wants to.
Who is exempt
Section 1.6.10 of the guideline says the RM3 million exemption applies to all categories of taxpayer. Size is measured by annual turnover or revenue, not by profit.
- Sole proprietors, including freelancers, home businesses and kedai owners.
- Partnerships.
- Companies, including small Sdn Bhd businesses.
- Co-operatives and other taxpayer categories.
When the exemption does not apply
Being small on your own is not always enough. The guideline switches the exemption off where the business is connected to a larger one. You are not exempt, even with turnover below RM3 million, if any of these is true:
- You have a non-individual shareholder (or equivalent) with annual turnover or revenue of at least RM3 million.
- You are a subsidiary of a holding company with annual turnover or revenue of at least RM3 million.
- You have a related company or joint venture with annual turnover or revenue of at least RM3 million.
If you already started issuing e-Invoices
Some businesses between RM1 million and RM3 million had already started e-Invoicing under the old threshold. LHDN's e-Invoice General FAQs say that a taxpayer who meets the exemption criteria does not need to apply to LHDN or get prior approval to stop. You may stop issuing e-Invoices immediately.
You may also keep going. The FAQs say exempt businesses can continue issuing e-Invoices voluntarily. If your customers are larger companies that prefer e-Invoices, that can be a sensible choice.
The FAQs also state that no e-Invoice compliance action or penalty applies to a taxpayer who is exempt.
If your turnover grows past RM3 million
The exemption follows your turnover. According to the LHDN FAQs, once annual turnover or revenue reaches RM3 million, e-Invoice generally starts on 1 January of the second year after that year. In LHDN's own example, a business that started in January 2026 and earned RM3.12 million that year starts e-Invoicing on 1 January 2028.
Businesses that already reached RM3 million in an earlier year follow the dates in section 1.5 of the guideline. If you are close to the line, check the guideline and FAQs for your exact case, or ask your accountant.
What the exemption does not change
The exemption is about issuing e-Invoices. It does not change your income tax duties.
- You must still keep sufficient records for 7 years under section 82 of the Income Tax Act 1967.
- You still declare your income every year: Form B for sole proprietors, Form P for partnerships, both due 30 June.
- You still issue normal invoices and receipts to customers. LHDN's guideline recognises that buyers may receive a normal receipt from a supplier that is not issuing e-Invoices.
- Suppliers above the threshold may still send you validated e-Invoices. Keep them with your records like any other bill.
What NiagaX does and does not do
NiagaX does
- Creates numbered invoices for your customers and keeps each one listed by customer.
- Shares an invoice as a link your customer can open.
- Keeps sales, expenses and invoices together, with a monthly CSV pack for your accountant.
NiagaX does not
- It does not submit e-Invoices to LHDN MyInvois. If you are not exempt, you need MyInvois or another provider for that.
- It does not decide whether your business is exempt. That depends on your turnover and ownership; check with your accountant.
- It does not file Form B or any tax return.
Questions owners ask
My turnover is RM400,000 a year. Do I need e-Invoice?
Not if you meet the exemption criteria. From 1 September 2026, taxpayers with annual turnover or revenue below RM3 million are exempt, unless they have a non-individual shareholder, holding company, related company or joint venture at RM3 million or more.
Do I need to apply to LHDN to be exempt?
No. LHDN's e-Invoice FAQs say no separate application or prior approval is needed for eligible taxpayers, including those who already started issuing e-Invoices and want to stop.
Can I still issue e-Invoices if I am exempt?
Yes. Exempt businesses may issue e-Invoices voluntarily. LHDN provides the MyInvois Portal and MyInvois app for this.
Does the exemption mean I do not need to keep records?
No. Record keeping under section 82 of the Income Tax Act 1967 applies to every business. Keep your books and supporting documents for 7 years.
Does NiagaX submit to MyInvois?
No. NiagaX keeps your invoices, sales and expenses in one place and lets you export them for your accountant. It does not connect to LHDN MyInvois.
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Official sources
Keep these records in one place
No card needed. After 30 days, Solo is RM79/month, or switch to Free.
Keep going
- For your type of business
- Invoice app for freelancers in Malaysia
- The NiagaX module for this
- Finance module
This guide is general information, not tax or legal advice. Rules change, so check the official LHDN source or ask your accountant before you act on it.