Malaysia e-Invoice Update September 2026:
What the RM3 Million Exemption Means for Your Business
A simpler guide to the latest e-Invoice exemption rules for Malaysian businesses
The Inland Revenue Board of Malaysia (IRBM) has issued an important update on e-Invoice, especially for Malaysian MSMEs.
Under the latest e-Invoice Guideline Version 4.8, dated 30 August 2026, together with the Frequently Asked Questions (FAQs) updated on 4 September 2026, taxpayers with annual turnover or revenue below RM3 million may qualify for an e-Invoice exemption.
For businesses that were previously preparing to start e-Invoice on 1 January or 1 July 2026, this update may change what they need to do.
The most important point: Having turnover below RM3 million does not automatically mean your business is exempt from e-Invoice.
You also need to look at who owns the business, whether it is part of a group, and whether it has related companies or joint ventures.
1. The RM3 Million Threshold
Under Section 1.6.1(e) of the latest e-Invoice Guideline, taxpayers with annual turnover or revenue of less than RM3 million are exempt from issuing e-Invoices, including self-billed e-Invoices, if they meet the required conditions.
This may apply to different types of taxpayers, including:
Sole proprietors | Partnerships | Companies | Cooperatives | Other eligible taxpayers
The threshold was previously RM1 million, so the change provides relief to more small and medium-sized businesses.
However, turnover is only the first thing to check.
Simple example:
A business with RM2.9 million in annual turnover is not automatically exempt. It still needs to check its ownership and group structure.
2. When a Business Below RM3 Million May Not Qualify
Section 1.6.10 of Version 4.8 sets out three situations where a taxpayer below RM3 million may still not qualify for the exemption.
A. A non-individual shareholder has turnover of at least RM3 million
For example, your company may only earn RM500,000 a year. However, if one of its shareholders is a company or another non-individual shareholder with annual turnover or revenue of at least RM3 million, your company will not qualify for the exemption.
In simple terms, you cannot look at your company’s revenue alone.
B. The business is a subsidiary of a larger holding company with turnover of at least RM3 million
A company may only earn RM400,000 revenue a year, but if it is a subsidiary of a holding company with annual turnover or revenue of at least RM3 million, the subsidiary will not qualify for the exemption.
IRBM gives an example of a small subsidiary that is still required to implement e-Invoice because its holding company meets the threshold.
What this means:
Saying “my company earns less than RM3 million” is not enough. You also need to check whether the company sits under a larger group.
C. The business has a related company or joint venture with turnover of at least RM3 million
The exemption also does not apply if the taxpayer has a related company or joint venture with annual turnover or revenue of at least RM3 million.
The Guideline refers to the definition of “related company” under Section 2 of the Promotion of Investments Act 1986.
So, when checking your e-Invoice position, look at the wider business structure:
Company → Shareholders → Holding Company → Related Companies → Joint Ventures
This is particularly important for family-owned groups, investment holding structures and businesses that operate through several companies.
3. What If You Already Started e-Invoice in 2026?
This is one of the most useful clarifications in the latest FAQ.
Suppose your business:
→ has revenue below RM3 million;
→ was previously scheduled to implement e-Invoice on 1 January or 1 July 2026; and
→ has already started issuing e-Invoices.
If your business now qualifies for the RM3 million exemption, it may stop issuing e-Invoices immediately.
You do not need to submit a separate application or get prior approval from IRBM to enjoy the exemption, as long as you meet the exemption requirements.
You may also choose to continue using e-Invoice voluntarily.
So you have a choice:
If you qualify for the exemption, you may stop e-Invoice or continue using it voluntarily.
4. What If You Did Not Implement e-Invoice Earlier?
Some businesses may have reached their original e-Invoice implementation date but did not start issuing e-Invoices.
The latest FAQ provides examples showing that if a taxpayer is now below RM3 million and meets all the exemption conditions, IRBM will not impose e-Invoice compliance action or penalties because the taxpayer is exempt.
This may provide relief to eligible MSMEs that had delayed implementation.
But take note:
This is not a general waiver for every business. You must first make sure that your business meets all the exemption conditions.
5. New Businesses Need to Keep an Eye on Their Revenue
The latest FAQ also explains how the exemption works for businesses that start operations from YA2026 onwards.
If a new business meets the exemption conditions and its first year’s annual turnover or revenue does not exceed RM3 million, it may qualify for the exemption.
However, once the business reaches or exceeds RM3 million, e-Invoice implementation will be required from 1 January in the second year after the Year of Assessment in which the RM3 million threshold was reached.
For example:
→ If the business reaches RM3.12 million in YA2026, it will need to implement e-Invoice from 1 January 2028.
→ If the business stays below RM3 million in YA2026 but reaches RM3.14 million in YA2027, it will need to implement e-Invoice from 1 January 2029.
The key point is that the exemption is not permanent. Businesses should check their revenue every year.
6. The Exemption Also Covers Self-Billed e-Invoices
The exemption for eligible taxpayers below RM3 million also covers self-billed e-Invoices.
This is useful to know because some businesses may think that they are exempt from issuing invoices to customers but still need to issue self-billed e-Invoices for certain transactions.
For taxpayers that qualify, the FAQ confirms that the exemption also applies to self-billed e-Invoice requirements.
7. Other e-Invoice Exemptions Still Apply
The RM3 million exemption is not the only exemption under the e-Invoice rules.
The latest Guideline also provides specific exemptions for certain persons and transactions, including, among others:
→ Foreign diplomatic offices
→ Individuals who are not conducting a business
→ Certain statutory bodies, statutory authorities and local authorities
→ Certain transactions involving international organisations
→ Employment income
→ Pensions
→ Alimony
→ Certain dividend distributions
→ Zakat
→ Certain securities and derivatives transactions
→ Certain disposals of shares
→ Specified donations or contributions
These are separate exemptions and should not be confused with the general RM3 million exemption for eligible MSMEs.
What Should Businesses Check Now?
The biggest takeaway is simple: do not stop at the RM3 million figure.
If your business is below RM3 million, management should still go through these five checks:
1. Check your annual turnover or revenue. Is it below RM3 million?
2. Check your shareholders. Do you have any non-individual shareholders with turnover or revenue of RM3 million or more?
3. Check your group structure. Are you a subsidiary of a holding company that meets the RM3 million threshold?
4. Check related companies and joint ventures. Is any related company or joint venture at or above RM3 million annual turnover or revenue?
5. Check your current e-Invoice status. If you already started e-Invoice but now qualify for the exemption, decide whether to stop or continue voluntarily.
Exempt Does Not Mean “Do Nothing”
Even if your business qualifies for the exemption, you should still keep proper invoices, receipts and accounting records.
You should also continue to monitor your annual revenue. A business that is exempt today may need to implement e-Invoice later if its revenue increases or its business structure changes.
Some businesses may also choose to continue using e-Invoice voluntarily because it can support better invoice management, more accurate data, automation and smoother integration with accounting systems.
IRBM continues to encourage eligible taxpayers to adopt e-Invoice voluntarily as part of Malaysia’s digitalisation initiative.
Final Thought
The latest IRBM update is good news for many Malaysian MSMEs, but the RM3 million figure should not be viewed on its own.
Do not read the rule as:
“Below RM3 million = no e-Invoice.”
A better way to understand it is:
“Below RM3 million + meeting the exemption conditions = potentially exempt.”
For business owners, the question is no longer just: “What is my company’s turnover?”
You should also ask: “Who owns my company? Is it part of a group? What other companies is it connected to, and what is their turnover?”
That is where a proper e-Invoice exemption assessment begins.
Malaysia’s e-Invoice requirements continue to evolve. Businesses should keep up with IRBM updates, review their structure regularly and make sure their accounting and operational processes remain aligned with the latest requirements.
Source Note
This article is based on the IRBM e-Invoice Guideline Version 4.8 dated 30 August 2026
https://www.hasil.gov.my/wp-content/uploads/IRBM-e-Invoice-Guideline.pdf
IRBM e-Invoice Frequently Asked Questions (FAQs) updated on 4 September 2026
https://www.hasil.gov.my/wp-content/uploads/lhdnm-e-invoice-general-faqs.pdf
This write-up is intended for general information only. Businesses should refer to the latest official IRBM guidance and seek professional advice where necessary.
Our Experts
Michele Lim Seet Ye
Assistant Director of
Global Business Services,
Cheng & Co Group
