E-invoice capital allowance: can you claim your setup costs?

Bought a laptop, scanner or software so you could start e-invoicing? You may be able to claim the cost against your tax. It's a 20% initial allowance plus a 40% annual allowance, so you can claim the full cost over two years, for spending in YA2024 to YA2027. A one-year claim was announced on 7 July 2026, but it isn't official yet.

Capital allowance is a tax deduction for equipment or software you keep using in your business, claimed over a few years. Paying a developer to connect your system to MyInvois counts too.

To qualify, your business needs to:

• be resident in Malaysia;

• have followed the e-invoice implementation timeline in P.U. (A) 265/2024;

• not have been granted any flexibility on issuing e-invoices;

• follow LHDN's e-invoice guidelines; and

• be registered with SSM, a business registration body, a local authority or a statutory body.

The rules at a glance

Two of these are already in force, one is only announced, and one is a separate deduction.

What's already in force

Two sets of rules were gazetted on 7 April 2026.

P.U. (A) 162/2026 covers ICT equipment for e-invoicing, both buying and installing it. The listed items include computers and components, storage, monitors, printers, scanners, card readers, barcode equipment, networking equipment, and software systems or packages.

P.U. (A) 163/2026 covers the development cost of customised computer software for e-invoicing. That means consultation fees, payments for software ownership rights and incidental fees for developing the software. The cost counts in the year the software can be used in your business.

Under both, you get a 20% initial allowance and a 40% annual allowance, so the cost is fully claimed over two years. Both carry the conditions listed at the top.

There's a catch on double claiming. The rules don't apply if you've already claimed certain other incentives on the same spending, such as another accelerated capital allowance, a reinvestment allowance or an investment tax allowance. Your tax agent can check this for you.

Also look closely at the "no flexibility" condition. If your business used the interim relaxation period (LHDN's grace period after e-invoicing started) or another administrative flexibility, you may not qualify. Some tax advisers also expect that fixing missed e-invoices under PKPS e-Invois may affect eligibility. If you've done either, ask your tax agent where you stand before you claim.

What's still waiting

On 7 July 2026, the government announced that businesses that fully comply with e-invoicing can claim the full allowance in one year. This covers ICT equipment, software packages and customised software development costs, for YA2026 and YA2027.

As of LHDN's e-Invoice FAQ updated 4 September 2026 (Q24), the one-year version is still waiting for its gazette order, and we haven't seen it published as of 21 October 2026. Until it is, plan on the two-year rule.

Don't mix this up with Budget 2027. It separately proposes an accelerated allowance for ICT equipment and software from 1 January 2027 to 31 December 2030, at the same 20% and 40% rates, plus a higher limit for small-value assets (from RM2,000 to RM3,000 each). Both are proposals, and neither is specific to e-invoicing.

A separate ESG deduction

MSMEs (as defined by SME Corp) may also claim a tax deduction of up to RM50,000 per tax year, for YA2024 to YA2027, on ESG-related spending. That includes consultation fees for developing customised e-invoice software. It sits under the Income Tax (Deduction for Expenditure in relation to Environmental Preservation, Social and Governance) Rules 2025, P.U. (A) 193. Your tax agent can tell you which route fits your spending.

Before you claim

LHDN advises reading the legislation for the full qualifying conditions. Before your next tax filing:

• Gather invoices for e-invoice related equipment, software and development work.

• Note what each item is for, when you bought it and when you started using it.

• Check that you followed your e-invoice timeline and the guidelines.

• Ask your tax agent to confirm which items qualify.

FAQ

• Who qualifies?
  A business resident in Malaysia that followed the e-invoice implementation timeline in P.U. (A) 265/2024, wasn't granted any flexibility on issuing e-invoices, follows LHDN's e-invoice guidelines, and is registered with SSM, a business registration body, a local authority or a statutory body.

• Can I claim the one-year write-off now?
  Not yet. It's announced but still waiting for its gazette order.

• Does a monthly software subscription count?
  The rules cover buying software systems or packages and developing customised software. Whether a subscription fits is a question for your tax agent.

• Which tax years does the two-year rule cover?
  YA2024 to YA2027, which means the tax years 2024 to 2027.

• Is this the same as the Budget 2027 allowance?
  No. The Budget 2027 allowance is a separate proposal and isn't specific to e-invoicing.

Keeping costs down

If you'd rather not spend much on e-invoicing in the first place, Duitbooks is free during beta, and early birds get an exclusive partnership offer after that. You can create invoices and submit them to MyInvois, with LHDN's validation result shown in the app. Try Duitbooks free

Sources

• P.U. (A) 162/2026, ICT equipment for e-invoice, gazetted 7 April 2026

• P.U. (A) 163/2026, customised software development for e-invoice, gazetted 7 April 2026

• LHDN e-Invoice General FAQs, updated 4 September 2026, Q24 (tax incentives table, including the pending one-year claim and P.U. (A) 193)

• HASiL media statement, 7 July 2026 (Malay only)

• Grant Thornton Malaysia tax alert on the e-invoice SVDP and the one-year allowance

• PwC Tax in Motion, Budget 2027 edition

This post is general information, not tax advice. Check your own situation with your accountant or tax agent.