Malaysia has recently announced a major update regarding the national e-Invoicing rollout, and it’s welcome news for many small and micro-business owners. Prime Minister Anwar Ibrahim confirmed that businesses with an annual turnover of less than RM1,000,000 are now exempt from mandatory e-Invoice implementation.
This update eases the compliance burden on thousands of small enterprises across the country, giving them more flexibility to focus on business growth without immediately adapting to the new e-Invoicing system.
1. What Happened?
The Inland Revenue Board (LHDN) has revised its e-Invoicing framework by raising the exemption threshold. Previously, many micro and small businesses were required to adopt e-Invoicing regardless of size, which posed challenges in terms of software costs, staff training, and integration with existing accounting systems.
Under the new rules:
- Businesses generating less than RM1 million annually are exempt from mandatory e-Invoice implementation.
- Thousands of micro-enterprises are now removed from the compliance list, giving them more time and flexibility to prepare for future adoption if needed.
- The update ensures that small businesses can focus on core operations rather than immediate digital tax compliance.
2. Who Is Affected?
The exemption primarily benefits:
- Micro and small businesses with annual revenue under RM1 million
- Sole proprietors and freelancers with low to moderate income
- Small retailers, home-based businesses, and service providers
- New startups that have not yet reached higher revenue tiers
Essentially, if your business falls within these categories, you do not need to implement e-Invoicing immediately, though preparing for future adoption is still recommended.
Meanwhile, medium and large companies that exceed the RM1 million threshold must continue preparing for their respective implementation dates.
3. When Will This Change Apply?
The good news for small business owners is that this exemption takes effect immediately under Malaysia’s updated e-Invoicing roadmap. This means that if your business has an annual turnover below RM1 million, you are no longer required to adopt e-Invoicing at any stage of the current implementation plan.
For businesses above RM1 million, the rollout schedule remains unchanged, so medium and large enterprises need to stay on track.
Here’s a quick breakdown:
- RM100 million and above: E-Invoicing is already fully implemented.
- RM25 million – RM100 million: E-Invoicing has also been implemented for this tier.
- RM5 million – RM25 million: Scheduled for 2025.
- Up to RM5 million: Scheduled for 2026.
This structured timeline ensures that larger businesses adopt the system gradually, allowing the government and enterprises to manage the transition smoothly.
Key takeaway for SMEs: If your revenue is below RM1 million, you don’t need to worry about e-Invoicing for now. However, keeping track of this roadmap is still useful if your business grows in the future and surpasses the exemption threshold. Planning ahead, such as using e-Invoice-ready accounting or invoicing systems that will make compliance easier when the time comes.
Source: hasil.gov.my
4. Where Does This Exemption Apply?
The new e-Invoicing exemption is nationwide, covering all of Malaysia and spanning virtually every industry sector. It doesn’t matter what kind of business you run; if your annual turnover is below RM1 million, this update applies to you.
Industries included are:
- Retail & F&B: Small cafés, restaurants, grocery shops, and convenience stores.
- Construction: Independent contractors, subcontractors, and small construction firms.
- Services: Freelancers, salons, repair shops, and small consultancy firms.
- Manufacturing: Micro and small-scale producers and workshops.
- e-Commerce: Online sellers, marketplaces, and digital entrepreneurs.
- Professional Sectors: Accountants, lawyers, consultants, and other solo practitioners or small partnerships.
Essentially, any taxpayer operating in Malaysia, regardless of business nature, size, or model, is covered by this guideline if their annual revenue falls below the RM1 million threshold.
This universal application ensures that all small businesses, whether urban or rural, traditional or online, are given the same relief.
5. Why Was This Change Introduced?
The government’s decision to raise the exemption threshold was driven by practical concerns voiced by micro and small enterprises. Many small business owners highlighted challenges such as:
- High implementation costs: Adopting e-Invoicing requires compatible software, hardware, and sometimes subscription services, which can be costly for businesses with limited budgets.
- Training and workflow adjustments: Staff need to learn new systems, adjust workflows, and manage digital records—a process that can be overwhelming for very small teams.
- Increased administrative workload: For micro-SMEs, additional reporting requirements and digital compliance can take time away from serving customers and growing the business.
- Limited digital infrastructure: Especially in rural areas, some businesses lack reliable internet access or modern digital tools.
By exempting businesses earning less than RM1 million annually, the government aims to:
- Reduce financial pressure on micro and small businesses
- Avoid overwhelming micro-entrepreneurs with complex compliance requirements
- Give small businesses more time to grow and scale before adopting e-Invoicing
- Ensure smoother nationwide adoption when businesses are ready
This move is widely regarded as a more practical and inclusive approach to Malaysia’s digitalization efforts. It balances the push toward modern digital tax compliance with the real-world constraints of smaller businesses, allowing them to gradually embrace technology without being forced into immediate compliance.
The recent e-Invoicing exemption brings clear benefits for small businesses, while also sending important signals for businesses that may soon grow beyond the threshold.
For businesses under RM1 million in annual revenue:
- No immediate need to implement e-Invoicing: Owners can continue using their existing invoicing methods without worry.
- No urgency to invest in new systems: Small businesses can avoid the upfront costs of digital tools or software just yet.
- Reduced compliance workload: Owners and staff won’t need to learn new systems or manage extra reporting for the time being.
- Business as usual: Focus can remain on day-to-day operations, customer service, and growth rather than navigating new compliance requirements.
For businesses approaching the RM1 million mark:
- This serves as a signal to start preparing early. While they are currently exempt, surpassing the threshold in future years may make e-Invoicing mandatory. Planning ahead—choosing e-Invoice-ready accounting systems or familiarizing staff with digital workflows—can smooth the transition when the time comes.
For larger businesses above RM1 million:
- Their obligations remain unchanged, but the exemption can reduce pressure on small suppliers who were previously unprepared for mandatory e-Invoicing.
- This makes supply chains more manageable and ensures that transactions with micro and small vendors continue smoothly without compliance disruptions.
Key takeaway: The update balances relief for micro-SMEs with the continued push for digitalization among larger businesses, giving everyone time to adjust at a pace that makes sense for their operations.
6. Tips for SMEs to Stay Prepared
Even if your business is currently exempt from e-Invoicing, taking proactive steps now can save a lot of headaches in the future. Preparing early ensures that when the requirement eventually applies, the transition is smooth and doesn’t disrupt your day-to-day operations. A little planning now can make a huge difference later.
Keep your records organized.
Start by ensuring your sales and invoice records are consistently well-organized. Whether you use digital systems or paper-based files, what matters most is having a reliable method to track and retrieve information quickly. Organized records make audits, reporting, and the eventual switch to e-Invoicing far easier.
Review your tools and processes.
Not all accounting or invoicing software is created equal. Take the time to assess whether your current tools can handle higher transaction volumes and comply with e-Invoicing requirements. A flexible, scalable e-invoicing system now means you won’t have to scramble to switch software at the last minute.
- Check software scalability: Ensure your software can grow with your business and support e-Invoicing features when needed.
- Streamline processes: Look for opportunities to simplify your workflow, making it easier for staff to adapt to digital invoicing.
- Train your staff gradually: Introduce your team to digital processes slowly, so they’re familiar with the tools and workflows before e-Invoicing becomes mandatory. Step-by-step guidance reduces errors and builds confidence.
Monitor your revenue.
Keep an eye on your sales so you know when you’re approaching the RM1 million threshold. Early awareness allows you to plan for the transition, budget for any software upgrades, and avoid last-minute pressure.
Stay informed on regulations.
Rules and deadlines can evolve. Make it a habit to regularly check government announcements related to e-Invoicing. Being aware of updates gives you time to adjust your systems, communicate with your staff, and ensure your business remains compliant without stress.
Plan for a smooth transition.
Even if your business is currently exempt from e-Invoicing, it’s smart to stay a step ahead. Start by keeping your sales and invoice records well-organized—digital or paper works fine, as long as it’s easy to track. If you’re using accounting or invoicing software, make sure it’s scalable and ready for e-Invoicing when the time comes.
It also helps to train your staff gradually, so they’re familiar with digital processes before it becomes mandatory. Keep an eye on your revenue too. Once you’re about to hit the RM1 million mark, you’ll want to be ready to adopt e-Invoicing without stress.
Conclusion
The new e-Invoicing update is a big sigh of relief for Malaysia’s smallest businesses. If your revenue is under RM1 million, you can carry on with your current invoicing methods without worrying about mandatory digital compliance for now.
For these businesses, the update means:
- No immediate compliance pressure
- No need to invest in new systems just yet
- Ability to focus on day-to-day operations and growth
At the same time, businesses that are approaching or planning to surpass the RM1 million threshold should view this as a signal to prepare early. Investing in e-Invoice-ready accounting software, training staff, and digitizing processes now will ensure a smooth, stress-free transition when compliance becomes mandatory.
In short, the government’s update lets small businesses breathe easier while still nudging everyone toward a digital future. You get to grow at your own pace, stay compliant when the time comes, and avoid being caught off guard.
