AccPilotMalaysia e-Invoice RM3 million exemption: who qualifies
LHDN raised the e-invoice exemption from RM1 million to RM3 million from 1 September 2026. Who is exempt, who is not, and what to tell clients.
“Do I need e-invoice?” is still the most common question small business owners ask their accountant. Since 1 September 2026 the answer for most of them is no: businesses with annual turnover or revenue below RM3 million are exempt from e-invoicing. Before that date the line was RM1 million. LHDN says the change covers more than 1.1 million businesses.
This guide was updated on 16 October 2026 for the RM3 million threshold. LHDN changes the rules from time to time, so check the LHDN e-Invoice implementation timeline and the current guidelines on hasil.gov.my/e-invois before advising a specific client.
Which businesses must issue e-invoices, and from when?
This is LHDN’s timeline as updated on 30 August 2026:
| Annual turnover or revenue | Mandatory from |
|---|---|
| Over RM100 million | 1 August 2024 |
| Over RM25 million, up to RM100 million | 1 January 2025 |
| Over RM5 million, up to RM25 million | 1 July 2025 |
| Up to RM5 million | 1 January 2026 |
| Below RM3 million | Exempt |
In practice, the 1 January 2026 phase now only catches businesses between RM3 million and RM5 million. The penalty-free relaxation period still runs to 31 December 2027, with enforcement from 1 January 2028.
How the threshold got here: it was RM500,000 in the original plan, went up to RM1 million from 1 January 2026, and up again to RM3 million from 1 September 2026, announced by the Prime Minister on 30 August 2026.
The catch: who owns the client
The exemption is not only about the client’s own turnover. Under LHDN’s e-Invoice General Guideline version 4.8 (30 August 2026), a business below RM3 million is not exempt if:
- it has a non-individual shareholder (for example, a company) with turnover of RM3 million or more,
- it is a subsidiary of a holding company with turnover of RM3 million or more, or
- it has a related company or joint venture with turnover of RM3 million or more.
So a stand-alone Sdn Bhd turning over RM2 million and owned by individuals is exempt. The same company is not exempt if its parent or a sister company crosses RM3 million. Check the shareholding and group structure before you tell a client they can relax.
Clients who already started e-invoicing
Many clients between RM1 million and RM3 million set up e-invoicing for the 1 January 2026 phase. LHDN’s e-Invoice FAQs of 4 September 2026 say a business below RM3 million that is not caught by the ownership rules above can stop issuing e-invoices, with no application to LHDN needed. LHDN still encourages small businesses to keep issuing them voluntarily.
Whether to stop is a judgement call. If the client’s big customers expect e-invoices, or the client is growing towards RM3 million, keeping the setup running may be less trouble than switching it off and on again.
Two related rules:
- New businesses. A business that started between 2023 and 2025 with turnover of RM3 million or more implements from 1 July 2026. A business started in 2026 or later that is expected to stay below RM3 million in its first year implements from 1 January of the second year after it first reaches RM3 million.
- Once in, stays in. Once a business’s implementation date has been set, a later drop in turnover does not change its obligation.
Who should be paying attention
- Clients between RM3 million and RM5 million. They are inside the mandate, with the relaxation period to the end of 2027 to get it right.
- Clients below RM3 million that sit inside a group or have a corporate shareholder. These are the ones most likely to be wrongly told they are exempt.
- Clients between RM1 million and RM3 million that already issue e-invoices. They need a clear answer on whether to carry on.
For all of them, issuing happens in their accounting software, so the work is mostly configuring that software and cleaning up customer master data.
What does e-invoicing not change?
e-Invoicing is about the invoices a business issues. It says nothing about the receipts and supplier bills a business receives, which is where the shoebox, the fading thermal paper and the year-end keying live. An exempt client still has to keep every receipt and supplier bill for 7 years under the Income Tax Act. A fully compliant one can still hand you a plastic bag of petrol receipts in December.
Those two sides of the paperwork need different tools:
- Issuing lives in the accounting software, connected to MyInvois.
- Receiving is a capture and record-keeping problem: get the document in, read it, post it, keep the copy for 7 years.
AccPilot works on the receiving side. Receipts and supplier bills get snapped, emailed or uploaded in, AccPilot reads them and suggests the entry, your staff check and export one clean Excel into any accounting software, and the clear copy is kept on the cloud. It does not issue e-invoices and does not need to. See how the plans work.
A short script for the client conversation
When a stand-alone client under RM3 million asks about e-invoice, the reassuring version is: “You are exempt for now. What I do need from you is every receipt and supplier bill, every month, so your books are right and we have the proof if LHDN asks.” That turns an anxious question into the monthly habit that saves you the year-end rush.