Who is exempt from e-invoicing in Malaysia? (2026)

Key takeaways:

• In December 2025, the Malaysian Cabinet raised the mandatory e-invoicing exemption threshold from RM500,000 to RM1 million, cancelling the planned Phase 5 rollout entirely.

• Businesses below RM1 million in annual revenue are generally exempt, but subsidiaries and companies related to RM1 million-plus groups may still be mandated regardless of their own revenue.

• Businesses below the threshold can still opt in voluntarily, particularly if they work with larger customers or expect to cross the RM1 million threshold soon.

If you're looking up the e-invoicing exemption in Malaysia for businesses below RM1 million in annual revenue, the basic rule is straightforward: businesses with annual revenue below RM1 million are generally exempt from mandatory e-invoicing.

The Malaysian government raised the exemption threshold from RM500,000 to RM1 million in December 2025 and cancelled the planned Phase 5 rollout. This means the rules are different from the original e-invoicing timeline you may have seen.

This guide explains who is exempt from e-invoicing in Malaysia, which businesses still need to comply, and what happens if your revenue eventually reaches RM1 million.

What the December 2025 Cabinet decision changed

On 6 December 2025, Prime Minister Anwar Ibrahim announced that the Cabinet had approved raising the e-invoicing exemption threshold from RM500,000 to RM1 million in annual turnover.¹

The Inland Revenue Board of Malaysia (IRBM) updated its official e-Invoice Guidelines to reflect this on 7 December 2025.²

Two things changed at once:

1. Businesses with annual revenue below RM1 million are no longer required to implement e-invoicing under the MyInvois system.

2. Phase 5, the planned final rollout wave targeting businesses earning between RM500,000 and RM1 million, which had been scheduled for 1 July 2026, was cancelled entirely.²

The decision came after feedback from small business owners about the cost and complexity of implementation. The government's position is that this is a recalibration, not a reversal.

The long-term direction toward digital invoicing remains intact; the threshold has simply been raised to give the smallest businesses more breathing room.

For businesses above RM1 million, nothing changed. Their mandatory go-live dates remain in place.

The current e-invoicing phases: who is already live

Phases 1 to 4 of Malaysia's MyInvois rollout are unaffected by the December 2025 decision. If your business falls into any of these phases, your mandatory go-live date has not changed:

The information in this table has been reviewed to be accurate as of 12 August 2026.

Phase 4 covers businesses with annual turnover between RM1 million and RM5 million, which were required to start e-invoicing from 1 January 2026.³ IRBM has since introduced a penalty-free relaxation period until 31 December 2027.³

During this period:

• You can issue consolidated monthly e-invoices instead of issuing one for every transaction.

• IRBM will not impose penalties as long as you have registered on MyInvois and are making a genuine effort to comply.

Full enforcement begins on 1 January 2028.³

How is your e-invoicing phase determined?

Your assigned phase is based on your annual turnover in your 2022 audited financial statements, or your 2022 tax return if you do not have audited accounts.⁴

Once your phase is assigned, your go-live date does not change if your revenue increases or decreases in later years.⁴

Are you exempt? How to check

The general rule is straightforward: if your annual revenue is below RM1 million, you are exempt from mandatory e-invoicing. But there are three things to check before you confirm that for your business.

1. What does your FY2022 audited financial statement show?

Your exemption status is based on your annual turnover as reported in your audited financial statements for the financial year 2022, not your current revenue.⁴ If you do not have audited accounts for that year, IRBM uses your 2022 tax return figure instead.⁴

If your business was incorporated after 2022, the reference year shifts to your first available audited year.

2. Are you a sole proprietor with multiple businesses?

If you own more than one business as a sole proprietor, IRBM adds the revenue from all of them together to determine your threshold.⁴

Crossing RM1 million in combined turnover, even if each individual business is below that figure, puts you in scope.

3. Have you already been assigned a phase?

Once IRBM assigns your business a mandatory go-live phase, you cannot re-qualify for the exemption later. This applies even if your revenue falls below RM1 million after your phase is confirmed.⁴ The rule is: once mandated, always mandated.

If you clear all three checks and your revenue is below RM1 million, you are exempt under the current framework.

The related-company exception: a trap for smaller businesses

This is the most commonly missed part of the exemption rules. Even if your own revenue is below RM1 million, you may still be mandated if your business is connected to a larger entity.

You are not exempt if any of the following apply:⁴

• Your business has a non-individual shareholder whose annual turnover is RM1 million or above

• Your business is a subsidiary of a holding company with annual turnover of RM1 million or above

• Your business is related to a RM1 million-plus entity through a joint venture or associated company arrangement

Businesses that fall into any of these categories must implement e-invoicing from 1 July 2026, regardless of their own revenue level.⁴

The implication is that a small Sdn Bhd with RM600,000 in annual revenue could still be mandated if a corporate shareholder or parent company clears the RM1 million mark. Revenue alone does not determine your status in these cases.

Before assuming you are exempt, check your shareholder register and corporate structure. If there is any corporate ownership or group relationship involved, verify your status with your accountant or company secretary.

What "exempt" actually means

If your business is exempt from e-invoicing, you don't need to:

• Register on MyInvois

• Issue validated e-invoices

• Submit consolidated e-invoices to IRBM

However, the exemption only applies to the MyInvois e-invoicing requirements. Your other invoicing and record-keeping obligations still apply.

You still need to:

• Issue proper invoices for your transactions

• Keep accurate financial records and supporting documents for the required retention period

• Issue SST tax invoices that meet Royal Malaysian Customs Department (RMCD) requirements if your business is SST-registered

In short, being exempt doesn't mean you can stop invoicing. It means you don't have to add the MyInvois layer to your existing invoicing process.

For a full breakdown of what a compliant standard invoice and SST tax invoice look like in Malaysia, including the mandatory fields for each, see our guides on what an invoice means in Malaysia and SST invoice format Malaysia.

Should exempt businesses opt in voluntarily?

Yes, but it depends on your business. MyInvois is open to businesses below the RM1 million threshold, so you can choose to adopt e-invoicing even if you're not required to.

Here’s a quick overview:

Voluntary adoption may not be worth the extra work if your revenue is well below RM1 million and most of your customers are individuals or other exempt businesses.

If you do want to get started, IRBM's MyInvois portal and free e-POS tool are available to businesses that choose to adopt e-invoicing voluntarily.²

What to do next

Your next step depends on where your business sits relative to the threshold:

• If you are clearly exempt: confirm your status using your FY2022 audited accounts, check your corporate structure for any related-company connections, and make sure your standard invoicing and record-keeping are in order.

• If you are exempt but approaching RM1 million: start planning for MyInvois now. Review your FY2022 revenue figure, assess your invoicing software for MyInvois compatibility, and factor compliance costs into your next budget cycle.

• If you are in Phase 4 (RM1 million to RM5 million): you are mandated from 1 January 2026. The relaxation period runs to 31 December 2027, but full enforcement begins 1 January 2028.³ Use the window to get your system in order rather than waiting for the deadline.

Frequently asked questions (FAQs)

What is the e-invoicing exemption threshold in Malaysia in 2026?

Businesses with annual turnover below RM1 million are exempt from mandatory e-invoicing under Malaysia's MyInvois system. This threshold was raised from RM500,000 to RM1 million following a Cabinet decision on 6 December 2025. The exemption is based on your annual revenue as reported in your FY2022 audited financial statements.

Was Phase 5 of Malaysia's e-invoicing rollout cancelled?

Yes. Phase 5, which was scheduled to mandate e-invoicing for businesses earning between RM500,000 and RM1 million from 1 July 2026, was cancelled when the Cabinet raised the exemption threshold to RM1 million. Phases 1 to 4 remain in place and are unaffected by this decision.

My revenue is below RM1 million, but my parent company's is above. Do I still need to comply?

You may. The exemption does not apply if your business is a subsidiary of a holding company with RM1 million-plus turnover, has a non-individual shareholder with RM1 million-plus turnover, or is related to a RM1 million-plus entity through a joint venture or associated company. In these cases, e-invoicing is mandatory from 1 July 2026 regardless of your own revenue. Check your corporate structure with your accountant or company secretary to confirm your status.

Can I still use MyInvois if my business is exempt?

Yes. Voluntary opt-in is available to any business, including those below the RM1 million threshold. It can be useful if you supply to mandated businesses that need validated e-invoices to support their tax deduction claims, or if your revenue is approaching RM1 million and you want to get ahead of the compliance requirement.

How does IRBM determine which financial year to use for the threshold?

For most businesses, IRBM uses the annual turnover reported in your audited financial statements for the financial year 2022. If you do not have audited accounts, your 2022 tax return figure is used instead. For businesses incorporated after 2022, the reference year shifts to your first available audited year. Once your phase is assigned, later changes to your revenue do not affect your go-live date.

Does being exempt mean I do not need to issue invoices at all?

No. The e-invoicing exemption only removes the requirement to use the MyInvois system. You still need to issue proper invoices under Malaysian commercial and tax law, and if your business is SST-registered, you must continue issuing tax invoices that meet RMCD requirements.

Sources:

1. freemalaysiatoday.com/category/nation/2025/12/06/govt-raises-e-invoicing-income-threshold-to-rm1mil

2. hasil.gov.my/en/e-invoice/

3. malaysia4u.com/einvoicing-guide

4. cleartax.com/my/en/e-invoicing-malaysia