Malaysia’s e-Invoicing Rollout: Where Phase 4 Businesses Stand in 2026

A phased rollout, now down to the RM3 million line

Malaysia’s e-Invoicing mandate has moved in stages since August 2024, working down from the country’s largest taxpayers to progressively smaller ones. Phase 4 — businesses with annual turnover up to RM5 million — became mandatory on 1 January 2026. With the exemption now set at RM3 million, the businesses actually caught by Phase 4 are those with turnover between RM3 million and RM5 million, plus smaller companies whose corporate shareholder, holding company or related company has turnover of RM3 million or more.

Each phase came with a relaxation period during which LHDN accepted consolidated e-invoices while businesses bedded in their systems; those for Phases 1–3 ended on 31 January 2025, 30 June 2025 and 31 December 2025. For taxpayers with turnover up to RM5 million, LHDN’s FAQ (updated 4 September 2026) puts the end of that period at 31 December 2027. The timeline has moved several times since 2024, so confirm your own position on the MyInvois portal or with your tax adviser before relying on any guide — including this one.

What hasn’t moved is the underlying obligation: the 1 January 2026 start date for Phase 4 still stands, and LHDN’s FAQ requires consolidated e-invoices to be issued every month throughout the relaxation period. A business in scope needs a way to issue MyInvois-validated e-invoices now; LHDN has said it will not impose penalties during the Phase 4 transition period provided businesses follow the relaxation rules.

The RM3 million exemption, and the RM10,000 rule above it

Businesses under RM3 million in annual turnover currently sit outside the mandate — a line raised from RM1 million with effect from 1 September 2026, after an earlier increase from RM500,000 to RM1 million for 2026. The exemption does not apply if the business has a corporate shareholder, holding company, related company or joint venture with turnover of RM3 million or more. For everyone in scope, the system isn’t all-or-nothing: for retail-style transactions to end consumers, a mandated business can keep issuing an ordinary receipt at the point of sale, then submit one consolidated e-invoice covering that month’s smaller transactions.

The exception is the RM10,000 rule. Under LHDN’s specific guideline, any single transaction exceeding RM10,000 — business-to-business, business-to-consumer or business-to-government — cannot be folded into the monthly consolidation once the relaxation period ends. The seller has to capture the buyer’s details (a Tax Identification Number, or a MyKad number for a Malaysian individual) and submit an individual e-invoice for that transaction to LHDN for real-time validation, the same as for any other in-scope B2B sale. Until the relaxation period ends on 31 December 2027, LHDN allows Phase 4 businesses to issue consolidated e-invoices for all transactions.

This is easy to miss precisely because it cuts across the consolidated-invoice convenience most retail-facing businesses assume applies uniformly. A furniture retailer or a car workshop that normally consolidates its point-of-sale receipts still needs to flag and itemise the occasional large-ticket sale individually.

What Phase 4 businesses should have in place now

• A MyInvois-connected system, or an accounting/ERP package with e-invoicing built in, able to submit invoices for real-time LHDN validation
• A process for capturing the buyer’s Tax Identification Number whenever a transaction requires an individual e-invoice
• A way to flag any single transaction exceeding RM10,000 so it’s itemised rather than folded into the monthly consolidated e-invoice once the relaxation period ends
• A note of your relaxation period end date (31 December 2027 for turnover up to RM5 million under LHDN’s current FAQ), and a yearly check of whether your own or your group’s turnover crosses RM3 million

What changed in Malaysian e-invoicing in 2025–2026?

The exemption threshold rose in stages to RM3 million from 1 September 2026, the Phase 4 relaxation period was extended twice to 31 December 2027, and LHDN opened a penalty-free programme for correcting missed e-invoices. The relaxation periods for Phases 1–3 have ended.

Date	What changed
5 June 2025	RM1 million–RM5 million band moved to 1 January 2026; turnover below RM500,000 exempt
6 December 2025	Exemption threshold raised from RM500,000 to RM1 million for 2026
31 December 2025	Phase 3 relaxation ends (Phase 1 and Phase 2 periods ended on 31 January 2025 and 30 June 2025)
1 January 2026	Phase 4 mandatory; single sales above RM10,000 can no longer be consolidated once a relaxation period ends
5 January 2026	Phase 4 transition lengthened from 6 to 12 months, with consolidation of all transactions and no penalties if the rules are followed
April 2026	Phase 4 relaxation extended to 31 December 2027
1 July 2026	Start date for non-exempt businesses that began operating in 2023–2025
7 July 2026	PKPS e-Invois announced: missed or wrong e-invoices can be corrected without penalty
1 September 2026	Exemption threshold raised from RM1 million to RM3 million, covering more than 1.1 million traders
31 December 2027	Phase 4 relaxation and PKPS e-Invois end

Which e-invoicing start date applies to your business?

Your start date depends on the turnover that fixed your phase, normally the revenue in your FY2022 audited financial statements, and on your group links. Once your date is fixed, later changes in turnover do not move it.

Your situation	Position as at October 2026
Turnover of RM3 million–RM5 million	Phase 4: mandatory since 1 January 2026, relaxation to 31 December 2027
Turnover below RM3 million, no group entity at RM3 million or more	Exempt (since 1 September 2026 if RM1 million or more); may stop issuing at once, with no application to LHDN
Turnover below RM3 million, but a corporate shareholder, holding company, related company or joint venture at RM3 million or more	Not exempt: Phase 4 from 1 January 2026
Began operating in 2023–2025, turnover of at least RM3 million	Mandatory from 1 July 2026
Begins operating from 2026, not exempt	1 July 2026 or the date operations start, whichever is later
Exempt, turnover later reaches RM3 million	1 January of the second year after that year of assessment: RM3 million in YA2027 means 1 January 2029
Date fixed, turnover later falls below RM3 million	No exemption: e-invoices must continue

Worked example: a company with RM3 million turnover

A company with FY2022 audited turnover of exactly RM3,000,000 has been in Phase 4 since 1 January 2026, can consolidate all sales until 31 December 2027, and from 1 January 2028 needs an individual e-invoice for a RM12,000 consumer sale.

1. Exemption test: the exemption covers turnover of less than RM3,000,000. RM3,000,000 is not less, so the company is not exempt; at RM2,999,999 with no group link it would be exempt from 1 September 2026.
2. Phase: RM3,000,000 is within ‘up to RM5 million’, so Phase 4 applies from 1 January 2026.
3. To 31 December 2027: all sales, large ones included, can go into one consolidated e-invoice a month, due within 7 calendar days after month end.
4. RM12,000 consumer sale on 10 March 2028: RM12,000 exceeds RM10,000, so it needs its own e-invoice, using the buyer’s MyKad number or TIN. A sale of exactly RM10,000 could still be consolidated.
5. Rest of March 2028: receipts of RM250,000 less RM12,000 leaves RM238,000 for the consolidated e-invoice (buyer ‘General Public’, TIN EI00000000010), due by 7 April 2028.
6. Goods from an overseas supplier cleared through customs on 15 March 2028: a self-billed e-invoice, with general TIN EI00000000030 for the supplier, is due by 31 May 2028, the end of the second month after clearance.
7. Overseas software subscription invoiced on 5 March 2028 and paid on 20 March 2028: the earlier event is in March, so the self-billed e-invoice is due by 30 April 2028.
8. Failing to issue an e-invoice: a fine of RM200–RM20,000, up to 6 months’ imprisonment, or both, under section 120(1)(d) of the Income Tax Act 1967.

How to get ready before the relaxation period ends: a checklist

Use the time to 31 December 2027 to move from monthly consolidation to the full rules.

1. Confirm your phase from your FY2022 audited turnover, and test every corporate shareholder, holding company, related company and joint venture against RM3 million.
2. If you are now exempt, decide whether to stop or continue voluntarily, and keep evidence of eligibility.
3. Choose a channel: the free MyInvois Portal, the free MyInvois e-POS, or an API link through your accounting software.
4. Capture buyer details: TIN or MyKad number for individuals; TIN, registration and SST numbers for businesses.
5. Diarise each month’s consolidated e-invoice, due within 7 calendar days after month end.
6. Flag sales above RM10,000 and other no-consolidation activities, such as motor vehicle sales, construction contracts and payments to agents and distributors.
7. List your self-billed situations, such as foreign suppliers, agents and individuals not in business.
8. Cancel an incorrect e-invoice within 72 hours of validation.
9. Correct any missed or wrong e-invoices under PKPS e-Invois before 31 December 2027.

Common e-invoicing mistakes Malaysian businesses make

Most errors come from testing the wrong turnover figure or treating the relaxation period as a pause in the obligation.

• Testing the exemption on this year’s revenue rather than the turnover that fixed your phase.
• Treating exactly RM3,000,000 as exempt: the exemption is for less than RM3,000,000.
• Overlooking a corporate shareholder, holding company, related company or joint venture at RM3 million or more.
• Saving consolidated e-invoices for the end of the relaxation period: LHDN requires them monthly.
• Assuming a fall in turnover releases you: once your date is fixed, you carry on.
• Forgetting self-billed e-invoices for imports and foreign services.
• Assuming gaps go unnoticed: on 27 April 2026 LHDN said e-invoice data reviews had led 38,906 taxpayers to report RM3.5 billion of income.

Malaysian e-invoicing terms explained

These are the terms LHDN uses in its e-invoice guidelines and FAQ.

• MyInvois: LHDN’s e-invoicing system, used through the MyInvois Portal or an API connection.
• Validation: LHDN’s real-time check; the validated e-invoice carries a QR code and must be shared with the buyer.
• Consolidated e-invoice: one monthly e-invoice for sales to buyers who did not ask for one.
• Self-billed e-invoice: issued by the buyer instead of the supplier, for example on purchases from foreign suppliers.
• Interim relaxation period: LHDN’s transition window, to 31 December 2027 for turnover up to RM5 million.
• General TIN: a placeholder, EI00000000010 for the general public, EI00000000020 for foreign buyers, EI00000000030 for foreign suppliers.
• PKPS e-Invois: LHDN’s special voluntary disclosure programme for e-invoices, open until 31 December 2027.