Malaysia: IRBM Raises the E-Invoice Exemption Threshold to RM3 Million, but Group Companies Stay in Scope
COUNTRY UPDATE — MALAYSIA
On August 30, 2026, Malaysia’s Inland Revenue Board (IRBM/LHDN) published version 4.8 of its e-Invoice General Guideline. With effect from September 1, 2026, the guideline raises the annual turnover threshold for exemption from e-invoicing from RM1 million to RM3 million.
The change removes many small businesses from the mandate. However, a new anti-fragmentation rule means that subsidiaries and related companies of larger groups generally remain in scope, whatever their own turnover.
Background
Malaysia introduced its MyInvois e-invoicing system in phases based on annual turnover. The rollout started in August 2024 for taxpayers above RM100 million and was extended step by step to smaller businesses, with the phase for businesses with turnover between RM1 million and RM5 million starting in 2026. Earlier guideline revisions had already raised the exemption threshold, most recently to RM1 million under version 4.7.
Version 4.8 raises the exemption threshold again, this time to RM3 million, just as the final phase was taking effect.
The Legislative Change
- New threshold: taxpayers with annual turnover or revenue below RM3 million are exempt from issuing e-invoices, including self-billed e-invoices. Voluntary adoption remains possible.
- Group and ownership exclusions (new paragraph 1.6.10): the exemption does not apply where the taxpayer has a non-individual shareholder, holding company, related company or joint venture with annual turnover or revenue of RM3 million or more. “Related company” is interpreted about section 2 of the Promotion of Investments Act 1986.
- New businesses: businesses that commenced operations between 2023 and 2025 must implement e-invoicing from July 1, 2026 only if their annual turnover or revenue is at least RM3 million. For businesses starting in 2026 or later that expect first-year turnover below RM3 million, implementation is deferred until January 1 of the second year after turnover first reaches RM3 million.
- Public bodies: statutory bodies, statutory authorities, local authorities and international organizations must issue e-invoices for goods sold or services performed from July 1, 2025.
A subsequent update of the IRBM guidelines in September 2026 (Specific Guideline version 4.9) adds guidance, including a chapter on the Special Voluntary Disclosure Programme.
Scope
The exemption is available to all categories of taxpayers—individuals, partnerships, companies, and cooperatives—below the RM3 million threshold, provided the group and ownership conditions are met. Qualifying taxpayers do not need to apply to IRBM for the exemption.
Timeline
- August 30, 2026: e-Invoice General Guideline version 4.8 published.
- September 1, 2026: RM3 million exemption threshold applies.
- September 2026: Specific Guideline version 4.9 published.
Businesses Affected
The change mainly benefits independent small and medium-sized enterprises with turnover between RM1 million and RM3 million. For multinationals, the key point is the group rule: a small Malaysian subsidiary, branch-like entity, or joint venture of a larger group will generally not be exempt, because its shareholder or related companies exceed the threshold. Multinationals should therefore not assume that their low-turnover Malaysian entities can switch off e-invoicing.
Required Actions
- Reassess every Malaysian entity against the RM3 million threshold and the paragraph 1.6.10 group and ownership tests, and document the conclusion.
- Map shareholders, holding companies, related companies, and joint ventures for each entity.
- Entities that already issue e-invoices under the previous rules should not deactivate their MyInvois integration until IRBM clarifies how the new threshold applies to taxpayers whose start date has already passed.
- On the purchasing side, keep self-billing processes in place, and confirm which suppliers are now exempt and will instead issue conventional invoices.
- Entities close to RM3 million should continue preparing, as crossing the threshold will trigger the obligation.
Practical Implications
The higher threshold is welcome relief for genuinely small businesses, but it creates a more complex scoping exercise for groups. The guideline also states that once a mandatory implementation date has been set, later changes in turnover do not normally remove the obligation. Commentators disagree on whether that principle prevents businesses between RM1 million and RM3 million that have already started from stopping now. Until IRBM publishes a transitional FAQ, continuing to issue e-invoices is the more cautious approach.
Accounts payable teams should expect a mixed supplier base, with some suppliers issuing validated e-invoices and exempt suppliers issuing conventional invoices, and should adjust input tax documentation controls accordingly.
Expected Next Steps
IRBM is expected to update its FAQs to address the transitional position of businesses that already started e-invoicing, and may issue further guideline revisions. Businesses should monitor the IRBM e-invoice guideline page for new versions.
How Can KGT Support You?
KGT helps multinationals meet e-invoicing, e-reporting and SAF-T obligations directly from SAP. Our SAP-integrated e-invoicing add-ons cover outbound and inbound flows, a data extractor and a monitoring cockpit, and can be deployed quickly for new mandates without waiting for a wider S/4HANA transformation. For organizations that have standardized on SAP Document and Reporting Compliance (DRC), KGT provides implementation, country roll-out and managed-service support, including master data readiness, tax determination review, and testing against the authorities’ validation rules.
KGT is an SAP partner for PE services and an SAP Build partner, and to become an SAP partner, strict due diligence requirements must be met, including having certified SAP consultants. You can find us at https://partnerfinder.sap.com/profile/0001925409
This update is provided for general information only and does not constitute tax advice.
