In 2027, every Malaysian business with annual turnover or revenue of RM3 million or more must issue e-invoices through LHDN’s MyInvois system. Businesses below RM3 million are exempt, after LHDN raised the threshold from RM1 million on 1 September 2026. Phase 4 businesses, with turnover from RM3 million to RM5 million, are in a relaxation period until 31 December 2027. That makes 2027 the last year before full enforcement. Budget 2027 did not change any of this.

Who must e-invoice: the phases

Phase Annual turnover or revenue Mandatory from Relaxation period ends
1 Above RM100 million 1 August 2024 31 January 2025
2 RM25 million to RM100 million 1 January 2025 30 June 2025
3 RM5 million to RM25 million 1 July 2025 31 December 2025
4 RM3 million to RM5 million 1 January 2026 31 December 2027
Exempt Below RM3 million Not required Not applicable

Phase 4 originally covered businesses with turnover from RM1 million to RM5 million. The higher exemption threshold took businesses between RM1 million and RM3 million out of the mandate.

The RM3 million exemption

LHDN raised the exemption threshold from RM1 million to RM3 million in annual turnover or revenue, effective 1 September 2026, in version 4.8 of its e-Invoice General Guideline. Three conditions decide whether it applies to you:

  • Group revenue counts. The exemption does not apply if your business has a non-individual shareholder, holding company, related company or joint venture partner with turnover of RM3 million or more.
  • Once in, you stay in. If you are already required to e-invoice, you keep e-invoicing even if your turnover later drops below RM3 million.
  • Crossing the threshold starts the clock. New businesses and businesses that grow past RM3 million have specific start dates in the guideline. Check yours before you plan.

Being exempt does not stop customers from asking. Larger B2B buyers may prefer suppliers who can issue e-invoices, even though your normal invoices stay valid while you are exempt.

What the relaxation period means

During the relaxation period, LHDN gives more flexibility. For example, you can issue consolidated e-invoices for transactions that would normally need an individual e-invoice. LHDN has also said it will not penalise non-compliance during this period. You are still expected to issue e-invoices, though. The relaxation period is time to fix problems, not permission to wait.

From 1 January 2028, Phase 4 businesses lose that flexibility. Failing to issue an e-invoice is an offence under Section 120 of the Income Tax Act 1967, with a fine of RM200 to RM20,000, imprisonment of up to six months, or both, for each offence.

Did Budget 2027 change e-invoicing?

No. Budget 2027, tabled on 9 October 2026, did not include new e-invoicing measures in the coverage we reviewed. The threshold and relaxation changes above came from LHDN before the budget.

One existing incentive is worth using this year. The tax deduction for ESG-related spending, which includes e-invoice implementation costs, allows up to RM50,000 per year of assessment from YA 2024 to YA 2027. The budget coverage did not report an extension, so YA 2027 may be the last year to claim it. Ask your tax agent which of your costs qualify.

For the wider budget changes, see Budget 2027 for SMEs and online sellers.

A 2027 plan for Phase 4 businesses

When What to do
Q4 2026 to Q1 2027 Choose how you will issue e-invoices. Get your MyInvois credentials and test in the sandbox
Q2 to Q3 2027 Issue individual e-invoices whenever a buyer asks. Submit a consolidated e-invoice for the rest within 7 days of each month end
Q4 2027 Review rejected and invalid documents. Fix buyer TINs and product classification codes. Stop relying on the relaxation-period flexibility
1 January 2028 Full enforcement begins

Choosing how to issue e-invoices

Method Best for Trade-off
MyInvois Portal A few e-invoices a month Free, but every e-invoice is typed in by hand
Store app or plugin Online stores Issues e-invoices from orders automatically, including the customer request form and monthly consolidation
Accounting or ERP software Businesses that already invoice from it Depends on whether your software supports MyInvois

If you are starting with the portal, our MyInvois Portal guide walks through login and your first e-invoice. For online stores, we build e-invoice apps for Shopify, WooCommerce, OpenCart and Shopline.

Frequently asked questions

Is my business exempt from e-invoicing in 2027?

If your annual turnover or revenue is below RM3 million, generally yes. The exemption does not apply if a corporate shareholder, holding company, related company or joint venture partner has turnover of RM3 million or more.

When do e-invoice penalties start for Phase 4 businesses?

Phase 4’s relaxation period ends on 31 December 2027. Full enforcement applies from 1 January 2028.

Does Budget 2027 delay e-invoicing?

No. Budget 2027 did not change the e-invoicing timeline or the RM3 million exemption threshold.

What happens if my turnover drops below RM3 million?

If you were already required to e-invoice, you continue. The exemption is for businesses that were never brought into the mandate.

Can an exempt business still issue e-invoices?

Yes. An exempt business can choose to issue e-invoices, which some do because their B2B customers ask for them.

Need help planning your switch? See our e-invoice integrations or the full e-invoicing checklist for online stores.

Sources: LHDN e-Invoice General Guideline and e-Invoice FAQ, and BDO Malaysia’s e-invoicing guide (September 2026).