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E-Invoicing in Malaysia: LHDN's guidelines for SMEs, and what to fix next
Malaysia’s e-Invoicing guidelines changed again in 2026. Businesses with annual turnover below RM3 million are now exempt, and the relaxed rules for smaller businesses run until the end of 2027. This guide explains who is still in scope, what LHDN allows until then, and how to replace the manual steps that many SMEs added to meet the deadline.
The short answer
Who LHDN's e-Invoicing guidelines apply to now.
Under LHDN’s e-Invoicing guidelines, a Malaysian business with annual turnover or revenue below RM3 million is exempt from e-Invoicing, unless it is linked to a larger group. Businesses at or above RM3 million must issue e-Invoices, and those with turnover up to RM5 million can issue monthly consolidated e-Invoices until 31 December 2027.
e-Invoicing is the system run by LHDN, Malaysia’s Inland Revenue Board, in which each invoice is sent to LHDN’s MyInvois system and validated before it reaches the buyer. It was introduced in phases from August 2024, starting with the largest businesses.
For many SMEs, the more useful question now is what to do with the manual steps they added to meet the deadline. In our view, those steps are worth fixing whether or not your business is still in scope, because they sit on the same customer, product and invoice records that any later use of AI will depend on.
Where things stand
The key dates in LHDN's e-Invoicing guidelines.
LHDN introduced e-Invoicing in four phases, based on annual turnover or revenue. Each phase had an interim relaxation period, in which the rules were applied more flexibly while businesses adjusted. The table shows each phase as LHDN publishes it.
| Annual turnover or revenue | e-Invoicing started | Interim relaxation period |
|---|---|---|
| More than RM100 million | 1 August 2024 | 1 August 2024 to 31 January 2025 |
| More than RM25 million, up to RM100 million | 1 January 2025 | 1 January 2025 to 30 June 2025 |
| More than RM5 million, up to RM25 million | 1 July 2025 | 1 July 2025 to 31 December 2025 |
| RM3 million up to RM5 million | 1 January 2026, or 1 July 2026 for some newer businesses | Until 31 December 2027 |
| Below RM3 million | Exempt from 1 September 2026. The threshold was RM1 million before that date. | Not applicable |
Sources: LHDN, e-Invoice implementation timeline (updated 30 August 2026) and e-Invoice FAQs (updated 4 September 2026). These rules have changed several times since 2024, so check LHDN's website for the latest position.
Check your position
Is your business still in scope?
Find the row that matches your business. Turnover means annual turnover or revenue, as LHDN defines it in its guidelines.
| Your business | Your position | What to do next |
|---|---|---|
| Turnover below RM3 million, and not linked to a larger group | Exempt. LHDN says you may stop issuing e-Invoices immediately, without applying for approval. | Decide whether to stop or to continue voluntarily. The section below sets out what to consider. |
| Turnover below RM3 million, but a company shareholder, holding company, related company or joint venture has turnover of RM3 million or more | Not exempt. The group rule in LHDN's guidelines keeps your business in scope. | Keep issuing e-Invoices, and plan to replace any manual steps before the end of 2027. |
| Turnover from RM3 million up to RM5 million | In scope. You can issue monthly consolidated e-Invoices until 31 December 2027. | Use the relaxation period to fix the manual steps behind your e-Invoices. |
| Turnover above RM5 million | In scope, and the relaxation period for your phase has ended. | Check that e-Invoices come from your systems rather than being keyed in by hand. |
If your turnover later reaches RM3 million, LHDN's FAQs say e-Invoicing starts on 1 January of the second year after the year in which it does. Sources: LHDN, e-Invoice implementation timeline (updated 30 August 2026) and e-Invoice FAQs (updated 4 September 2026).
The relaxation period
What the relaxation period allows, and why it matters.
During the interim relaxation period, LHDN allows businesses with turnover up to RM5 million to issue one consolidated e-Invoice each month, instead of one e-Invoice for each sale. The consolidated e-Invoices must still be issued every month. For these businesses, the period runs until 31 December 2027.
Many SMEs use this period to keep their old way of working. Staff total the month’s sales in a spreadsheet and then key one consolidated e-Invoice into the MyInvois portal. This works for now, but it depends on the relaxation period, and the relaxation period has an end date.
When it ends, LHDN’s standard rules apply. Replacing a manual monthly step with e-Invoices that come straight from your sales and accounting systems takes time, because customer records, product codes and system connections usually all need work. Starting early leaves room to do this in order.
“Monthly consolidated e-Invoices are allowed until the end of 2027. Plan now to replace the manual steps behind them.”
If you are exempt
Should you stop, or continue?
If your business is below RM3 million and not linked to a larger group, LHDN’s FAQs say you may stop issuing e-Invoices immediately. You do not need to apply or wait for approval. LHDN also encourages exempt businesses to continue voluntarily. Before you decide, consider three points.
- Your customers. Some larger customers may prefer to keep receiving e-Invoices, because it simplifies their own records. Ask your main customers before you change anything.
- Your growth. If your turnover is likely to reach RM3 million within a few years, you will have to start again. Keeping a working setup may cost less than rebuilding it later.
- Your records. Whether you stop or not, correct customer details and consistent product codes still save time at month-end. They are also the records an AI tool would later rely on.
Five practical steps
How to replace the manual steps.
These steps apply to any business that issues e-Invoices, whether it must or chooses to. They start with the process, because the systems you use and the data they hold both depend on how the work is done.
- 01
Map how each invoice reaches MyInvois today.
Write down every route an invoice takes, from the sale to LHDN's MyInvois system. Note who does each step, which system or spreadsheet they use, and where figures are typed in again. Many SMEs find two or three different routes, for example one for walk-in sales and one for trade customers. Our guide to process mapping explains how to do this.
- 02
Keep customer tax details in one place.
An e-Invoice needs correct tax details for the buyer, such as the tax identification number. Keep these details in your accounting or sales system rather than in a separate spreadsheet, and give one person the job of keeping them up to date. Our guide on when an SME has outgrown spreadsheets explains how to move records like these into a system.
- 03
Agree your product classification codes once.
Each item on an e-Invoice carries a classification code. Agree the code for each product or service once, record it against the item in your system, and stop choosing codes invoice by invoice. This removes a common cause of errors and inconsistent records.
- 04
Send e-Invoices from your systems, not by hand.
Keying invoices into the MyInvois portal works for small volumes, but it means every sale is typed twice. Check whether your accounting, POS or ERP software can send e-Invoices to MyInvois directly, or through a provider connected to it. Our guide to choosing business software explains what to ask a vendor about connections.
- 05
Correct past errors, then check every month.
LHDN's Special Voluntary Disclosure Programme lets businesses submit e-Invoices they missed, or correct ones issued with errors, without penalties until 31 December 2027. To submit past e-Invoices under the programme, your e-Invoice software must support LHDN's special SVDP formats, so check this with your software provider first. After that, run a short monthly check on rejected e-Invoices and missing customer details, so that new problems are caught early.
Why it matters for AI
Clean invoice data is a foundation for AI.
e-Invoicing asks for the same things that AI tools depend on: one correct record for each customer, consistent codes for each product, and systems that pass data on without re-keying. A business that sends e-Invoices straight from clean records has already built part of its data foundation.
This matters because AI tools treat the data they are given as correct. If customer details are duplicated, or product codes differ between systems, a forecast or a sales analysis built on that data will be wrong in ways that are hard to see. Our guide to preparing your data for AI sets out the checks to run.
For more on how e-Invoicing fits into wider readiness, see our guide to AI readiness for Malaysian SMEs.
Common pitfalls
Three ways e-Invoicing work goes wrong.
Treating the relaxation period as permanent
A business keeps keying one consolidated e-Invoice into the portal each month, because it works today. The end of 2027 then arrives with the customer records and system connections still not ready, and the work has to be rushed.
Stopping without checking the group rule
A business below RM3 million stops issuing e-Invoices without checking its shareholders and related companies. If one of them has turnover of RM3 million or more, the business is still in scope.
Fixing the invoices but not the records
Staff correct each rejected e-Invoice by hand but never fix the customer details or product codes behind it. The same errors return every month, and the records stay unreliable for any other use, including AI.
Common questions
Questions Malaysian SMEs ask about e-Invoicing.
Is e-Invoicing mandatory for SMEs in Malaysia?
It depends on turnover. Since 1 September 2026, businesses with annual turnover or revenue below RM3 million are exempt, unless a company shareholder, holding company, related company or joint venture has turnover of RM3 million or more. Businesses at or above RM3 million must issue e-Invoices. Check LHDN’s website for the latest position, because the threshold has changed twice since December 2025.
Our turnover is below RM3 million, but we already issue e-Invoices. Can we stop?
Yes, if your business meets the exemption conditions. LHDN’s FAQs say an exempt business may stop issuing e-Invoices immediately, and that no application or approval is needed. LHDN also encourages exempt businesses to continue voluntarily.
What is the interim relaxation period, and when does it end?
It is a period in which LHDN allows businesses to issue one consolidated e-Invoice each month, instead of one e-Invoice for each transaction. For businesses with turnover up to RM5 million, it runs until 31 December 2027. The consolidated e-Invoices must still be issued every month during this period.
What can we do about e-Invoices we missed or got wrong?
LHDN’s Special Voluntary Disclosure Programme runs until 31 December 2027. It lets businesses submit e-Invoices they missed, or correct ones issued with errors, without penalties. It is also worth fixing the cause, such as missing customer details, so that the same errors do not happen again.
Does e-Invoicing make a business ready for AI?
Not on its own, but it helps. e-Invoicing needs clean customer records, consistent product codes and connected systems, and AI tools need the same things. Our free Readiness Snapshot takes about five minutes and shows which foundation, processes, systems or data, is most likely to hold back your first use of AI.
Start here
See where your foundations stand.
The free Readiness Snapshot takes about five minutes. It emails you a PDF report showing where your processes, systems and data stand on the path to AI, and which gap to close first.