RM3 million e-invoice exemption: does your business qualify?

If your business has annual turnover or revenue below RM3 million, it does not have to issue e-invoices from 1 September 2026. The main exception is when a corporate shareholder, holding company, related company or joint venture has RM3 million or more. If your business already started, it can stop right away without applying to LHDN, or carry on by choice.

That is the short answer. The rest of this guide helps you check it properly, because the details decide whether your business is really out. New to e-invoicing? Start with our LHDN e-invoice guide.

What changed on 1 September 2026?

On 30 August 2026, HASiL announced that the government had raised the e-invoice threshold from RM1 million to RM3 million, starting 1 September 2026. Businesses with annual revenue or sales below RM3 million are no longer required to implement e-invoicing. HASiL said the change benefits more than 1.1 million businesses (HASiL media release, 30 Aug 2026).

If this feels like the rules keep moving, you are not imagining it. The line has shifted twice before:

• June 2025: businesses below RM500,000 were exempted (HASiL, 5 Jun 2025).

• January 2026: the exemption rose to below RM1 million (HASiL, 31 Dec 2025).

• September 2026: the exemption rose to below RM3 million.

So if your business checked last year and decided it was in, it is worth checking again.

Which revenue figure should you use?

LHDN looks at annual turnover or revenue, worked out like this (General FAQs, Q101):

• With audited accounts: the turnover or revenue in the statement of comprehensive income.

• Without audited accounts: the annual revenue reported in the tax return for that year of assessment.

LHDN's own examples look at YA2022 and each year after it. Pull those figures out and put them side by side. If none of them reach RM3 million, your business passes the first test.

Sole proprietors, take note. If you run more than one sole proprietorship under your name, LHDN adds them all together (Q102). In LHDN's example, a cosmetics shop (RM750,000), a tailor (RM820,000) and a cafe (RM1.54 million) are each below RM3 million. Together they come to RM3.11 million, so the owner is not exempt.

Could a related company pull your business back in?

This is the part many owners miss. Your business can be below RM3 million and still not be exempt. The exemption does not apply if your business has any of these with annual revenue of at least RM3 million (e-Invoice Guideline v4.8, section 1.6.10):

• a shareholder that is not an individual, such as another company

• a holding company

• a related company or joint venture

LHDN's example: RC Cycling Sdn Bhd made RM400,000, but it is a subsidiary of a company that already does e-invoicing. So RC Cycling still had to start on 1 July 2026 (Q99).

When are companies "related"?

LHDN explains this with examples in Q103:

Situation Related for e-invoicing? A company owns 20% or more of your company Yes A company owns less than 20% but controls your operations Yes The same individual owns both companies No The companies only share a director who holds no shares No The same person is both shareholder and director of both No

A quick way to check: list every shareholder in your SSM records. If all of them are individuals and your business has no joint venture, the related-company rule is unlikely to catch you. If any shareholder is a company, check that company's revenue too.

Already issuing e-invoices? Can you stop now?

Yes, if your business is below RM3 million and none of the exceptions above apply. LHDN says no application or prior approval is needed, and the business "may discontinue issuing e-Invoices immediately". It can also choose to keep going (Q17 to Q20).

What if your business was supposed to start on 1 January or 1 July 2026 but never did? If it now qualifies for the exemption, LHDN says no compliance action or penalty will be taken (Q15 and Q16).

If your business stops, tell your regular customers, especially companies that have been receiving validated e-invoices from you. A short WhatsApp or note on the next invoice is enough.

Should your business keep e-invoicing anyway?

There is no single right answer. Think about how your business actually runs.

Reasons to keep going:

• Revenue is getting close to RM3 million.

• Bigger customers prefer validated e-invoices for their own records.

• The set-up is done and your team already knows the routine.

Reasons to stop:

• Very few invoices a month, so the effort is not worth it.

• Most of the work is manual and eats into selling time.

• Software or service fees are hard to justify.

Two rules to keep in mind before deciding:

1. If revenue reaches RM3 million, your business must start from 1 January of the second year after that year of assessment. For example, crossing RM3 million in 2026 means starting on 1 January 2028 (Q100).

2. Once your business is mandated this way, it stays in, even if revenue drops below RM3 million later (Q104).

So a growing business may find it easier to keep the habit than to stop now and restart in a year or two.

What still applies if your business is exempt?

Being exempt does not mean no paperwork.

• Your normal receipts and bills still count. Customers can use them as proof of expense for tax (Guideline v4.8, section 1.6.2).

• No consolidated or self-billed e-invoices needed (Q105).

• Selling on Shopee, Lazada or another local platform? The platform issues the e-invoice for those sales, but your business still needs to give the platform its details (Q106).

• Serially numbered receipts: businesses with gross takings above RM150,000 still need to issue them under section 82(1)(b) of the Income Tax Act 1967 (Q109).

If a customer still asks your exempt business for an e-invoice, see Below RM3 million but a customer still wants an e-invoice? Your options.

A 10-minute check for your business

Grab your accounts or tax returns and go through this list. Take it to your accountant or tax agent if anything is unclear.

1. What was the business's annual revenue for YA2022 onwards, using the right figure?

2. If it is a sole proprietorship: what is the total across every business under the owner's name?

3. Is any shareholder a company? If yes, what is that company's revenue?

4. Is there a holding company, related company or joint venture at RM3 million or more?

5. Has the business's own revenue already reached RM3 million in any year, which would set a start date?

6. If exempt: stop or continue, and who will tell the customers?

FAQ

• Does the business need to apply to LHDN to stop e-invoicing?
  No. LHDN says no separate application or prior approval is needed for businesses that qualify (Q17).

• Two sole proprietorships under one name, each below RM3 million. Are both exempt?
  Only if the combined total is below RM3 million. LHDN adds up all sole proprietorships under one name (Q102).

• One person owns two Sdn Bhds. Are they related companies?
  Not if both are owned by that individual, with no company shareholder (Q103). Each one is checked on its own revenue.

• Revenue crossed RM3 million once but has dropped since. Can the business stop?
  No. Once your business is mandated because its revenue reached RM3 million, it continues even if revenue falls later (Q104).

How Duitbooks can help

If your business decides to keep e-invoicing, or wants to be ready before it reaches RM3 million, Duitbooks is free during beta. You can create an invoice, submit it to MyInvois and see LHDN's validation result in Duitbooks. Then send the invoice as a PDF on WhatsApp, the way many customers already like it. For regular customers, set up recurring invoices so the monthly ones are ready on time.