Key Changes to Malaysia’s e-Invoice requirements (Including the revision of the annual turnover threshold from RM1 million to RM3 million)

Date: 8 September 2026

Introduction

Micro, small and medium enterprises (MSMEs) with annual sales below RM3 million are exempt from the e-Invoice requirement following the increase in the implementation threshold from RM1 million to RM3 million. The revised threshold, effective 1 September 2026, was announced by the Prime Minister and subsequently confirmed by the Inland Revenue Board (IRB). Following the announcement by the Prime Minister, the following documents were issued by IRB

a.     Media Statement (dated 30 August 2025)

b.     E-Invoice Guideline Version 4.8 (dated 30 August 2026)

c.     Frequently Asked Questions (FAQ) (dated 4 September 2026)

d.     E-Invoice Specific Guidelines Version 4.9 (dated 7 September 2026)

The following is taken from our internal memo highlighting some of the key changes. You are advised to refer to the relevant guidelines and stay tuned for further updates, as additional changes may be introduced by IRB.

 

1. Businesses below RM3 million: when is the exemption available?

A taxpayer with annual turnover or revenue below RM3 million may be exempt from e-Invoice if the exemption criteria are satisfied. Eligible exempt taxpayers are also not required to issue consolidated e-Invoices or self-billed e-Invoices.

Example: ABC Sdn Bhd is 100% owned by Mr Tan and has annual revenue of RM1.8 million. It has no corporate shareholder, no holding company, and no related company or joint venture that would disqualify the exemption. ABC Sdn Bhd may qualify for the exemption.

IRBM reference: FAQ 98, FAQ 99 and FAQ 105

2. Existing businesses that were below RM3 million in YA 2022

For a business already operating in YA 2022, the starting point is its YA 2022 annual turnover or revenue. If the YA 2022 amount was below RM3 million and the business satisfies the exemption criteria, it may remain exempt.

However, if its annual turnover or revenue reached or exceeded RM3 million in YA 2023, YA 2024 or YA 2025, the mandatory e-Invoice implementation date is 1 July 2026.

Example: A standalone company recorded RM400,000 revenue in YA 2022 and RM3.1 million in YA 2024. It is required to implement e-Invoice from 1 July 2026.

IRBM reference: FAQ 12(a)

3. If the RM3 million threshold is first reached in YA 2026 or later

For an exempt MSME that first reaches or exceeds RM3 million in YA 2026 or a later YA, the business is required to implement e-Invoice from 1 January in the second year following that YA.

Example: A qualifying exempt business records RM3.2 million revenue in YA 2026. Its e-Invoice implementation date is 1 January 2028.

IRBM reference: FAQ 12(a) and FAQ 100

4. Corporate shareholders can cause a business below RM3 million to lose the exemption

A taxpayer with annual turnover or revenue below RM3 million should not be automatically treated as exempt if it has a corporate shareholder. The exemption is not available where a non-individual shareholder has annual turnover or revenue of at least RM3 million.

Example: A Malaysian Sdn Bhd has annual revenue of RM1.5 million and is 100% owned by a Hong Kong company. Where a Malaysian company has a corporate shareholder, whether local or foreign, with annual turnover or revenue of at least RM3 million, the Malaysian company does not qualify for the exemption.

IRBM reference: FAQ 99

5. A subsidiary below RM3 million may still be required to implement e-Invoice

A taxpayer does not qualify for the exemption if it is a subsidiary of a holding company with annual turnover or revenue of at least RM3 million.

Example: A subsidiary records only RM400,000 annual revenue, but its holding company has turnover above the threshold. The subsidiary does not qualify for the exemption and, where the concessionary implementation rule applies, is required to implement e-Invoice from 1 July 2026.

IRBM reference: FAQ 99

6. Companies with a common corporate shareholder may be treated as related companies

For e-Invoice purposes, a company holding at least 20% of the issued share capital in another company is treated as a related company. A related-company relationship may also arise when shareholding is below 20% if there is control over the company's operations.

The exemption is affected where the relevant related company has annual turnover or revenue of at least RM3 million.

Example: Holding Co owns 51% of Company A and 25% of Company B. Company A has annual revenue above RM3 million while Company B has annual revenue of only RM600,000. Company B may not qualify for the exemption because the companies are related through a common corporate shareholder.

IRBM reference: FAQ 103(a)

7. The same individual owning two companies does not automatically make them related

Where the common owner is an individual, two companies are not treated as related companies for e-Invoice purposes merely because they are owned or controlled by the same individual shareholder.

Example: Mr Yap owns 100% of Company A and 100% of Company B. Company A earns RM3.5 million while Company B earns RM500,000. Company B may still qualify for exemption if it meets the other exemption criteria.

IRBM reference: FAQ 103(b)

8. A common director alone does not create a related-company relationship

Where two companies have the same director but that director does not hold shares in the companies, the common directorship alone does not make the companies related for e-Invoice purposes.

Example: Company A and Company B have the same director but are owned by different individual shareholders. Company A exceeds RM3 million while Company B remains below RM3 million. Company B may still qualify for the exemption if the other criteria are met.

IRBM reference: FAQ 103(c)

9. Same individual shareholder and common director

The FAQ also confirms that where the same individual owns two companies and serves as a director of both, the two companies are not treated as related merely because of that common individual ownership and directorship.

Example: Jocelyn owns 80% of both Company A and Company B and is a director of both. Company A exceeds RM3 million while Company B remains below RM3 million. Company B may still qualify for the exemption if the other exemption criteria are satisfied.

IRBM reference: FAQ 103(d)

10. Businesses commencing in YA 2023 to YA 2025

A business that commenced operations in YA 2023, YA 2024 or YA 2025 and reached or exceeded RM3 million in those years is required to implement e-Invoice from 1 July 2026.

Even where turnover remains below RM3 million, the business may still be required to implement e-Invoice from 1 July 2026 if it does not satisfy the exemption criteria.

Example: A company commenced operations in 2023 and recorded revenue below RM3 million in YA 2024 and YA 2025. However, it is wholly owned by a corporate parent with an annual turnover of at least RM3 million. As the exemption criteria are not met, the company is required to implement e-Invoice from 1 July 2026.

IRBM reference: FAQ 13(a) to 13(c)

11. Businesses commencing from YA 2026 onwards

For a business that commences operations from YA 2026 onwards, the e-Invoice implementation date depends on whether the taxpayer meets the exemption criteria.

Where the exemption criteria are not met, the taxpayer is required to implement e-Invoice from 1 July 2026 or the business commencement date, whichever is later.

Example: A new subsidiary commences operations on 1 September 2026 and does not qualify for the e-Invoice exemption. As its commencement date is later than 1 July 2026, it is required to implement e-Invoice from 1 September 2026.

Where the exemption criteria are met, the taxpayer is exempt from e-Invoice until its annual turnover or revenue reaches or exceeds RM3 million. Once the RM3 million threshold is reached, the taxpayer is required to implement e-Invoice from 1 January in the second year following the relevant YA.

Example: Warung Salima commenced operations on 1 January 2026. In YA 2026, it recorded annual revenue of RM3.12 million. As the RM3 million threshold was reached in YA 2026, the business is required to implement e-Invoice from 1 January 2028, which falls in the second year following YA 2026

IRBM reference: FAQ 14

12. Taxpayers that already started e-Invoice but now qualify for the RM3 million exemption

The updated FAQs provide relief for taxpayers that implemented e-Invoice under the earlier lower exemption threshold but now qualify for the RM3 million exemption. No separate application or prior approval from IRBM is required to stop issuing e-Invoices.

Example: A standalone company with revenue of RM1.7 million in YA 2025 and started issuing e-Invoices on 1 July 2026. If it now meets the exemption criteria, it may discontinue issuing e-Invoices immediately or continue issuing them voluntarily.

IRBM reference: FAQ 16 to FAQ 20

13. Once mandatory, a later fall below RM3 million does not restore the exemption

Once an MSME's mandatory implementation year has been determined, the taxpayer must continue issuing e-Invoices even if its turnover or revenue falls below RM3 million in a subsequent year.

Example: A company exceeds RM3 million in YA 2026 and is therefore required to implement e-Invoice from 1 January 2028. Its revenue subsequently falls below RM3 million in YA 2027. The company is still required to implement e-Invoice from 1 January 2028 and cannot revert to the exemption.

IRBM reference: FAQ 104

14. Interim relaxation for taxpayers with turnover up to RM5 million

For taxpayers with mandatory implementation dates of 1 January 2026 or 1 July 2026, the interim relaxation period runs until 31 December 2027.

During this period, qualifying taxpayers may use the permitted consolidated e-Invoice and consolidated self-billed e-Invoice treatment instead of issuing individual documents for every transaction. However, consolidated submissions are still required monthly.

The interim relaxation does not defer the taxpayer’s mandatory implementation date.

IRBM reference: FAQ 113 to FAQ 116

15. Multiple sole proprietorship businesses are aggregated for the RM3 million threshold

For a sole proprietor with more than one sole proprietorship business, the annual turnover or revenue of all sole proprietorship businesses owned or registered under that individual must be combined when testing the RM3 million threshold.

Example: An individual owns three sole proprietorships with annual turnovers of RM750,000, RM820,000, and RM1.54 million. The combined turnover is RM3.11 million. The RM3 million threshold is therefore exceeded even though no single business exceeds RM3 million.

IRBM reference: FAQ 102

16. e-Invoice Special Voluntary Disclosure Programme (SVDP)

IRBM’s e-Invoice Special Voluntary Disclosure Programme runs from 7 July 2026 to 31 December 2027. Taxpayers who identify any e-Invoice non-compliance may rectify the issues during this period. No separate registration is required.

Example: If transactions were omitted from a consolidated e-Invoice, the taxpayer may rectify the omission during the SVDP period using the methods permitted by IRBM.

IRBM reference: FAQ 123, FAQ 127 and FAQ 131

Practical Checklist for Businesses to Determine the e-Invoice Commencement Date

• Confirm the annual turnover/revenue for the relevant YA.

• Identify whether the shareholder is an individual or a corporate body.

• If there is a corporate shareholder, check whether its turnover/revenue is at least RM3 million.

• Check whether the company is a subsidiary of a holding company with turnover/revenue of at least RM3 million.

• Identify any related company or joint venture and assess whether the RM3 million threshold is met.

• Confirm the correct mandatory implementation date.

• Determine whether the company is within the interim relaxation period.

Source: Official source: IRBM e-Invoice Guideline updated 30 August 2026 | IRBM e-invoice General FAQs updated 4 September 2026 | IRBM Specific e-Invoice Guideline updated 7 September 2026 |Hasil Media statement dated 30 August 2026