Taxpayers with annual turnover or revenue below RM3 million are currently exempt from issuing e-invoices — but only if nothing in their ownership structure cancels that. A non-individual shareholder, a parent company or a related company with turnover of at least RM3 million takes the exemption away, even when your own revenue is small.
That is the whole answer in two sentences, and the rest of this page is the detail behind it: what counts as turnover, when companies count as "related", who else LHDN exempts regardless of size, and what being exempt does not protect you from.
The RM3 million exemption
The Government exempted taxpayers with annual turnover or revenue below RM3 million from issuing e-invoices. It applies across taxpayer categories — individuals, partnerships, companies, co-operatives and so on. There is no industry exemption: LHDN states that no industry is excluded from e-invoicing as a whole.
The exemption threshold was raised from RM1 million to RM3 million: HASiL announced the change on 30 August 2026, effective 1 September 2026. An older figure you have read somewhere is probably out of date, so check the current number before acting on it — the link is at the end of this page.
What counts as annual turnover or revenue
LHDN determines it as follows:
- With audited financial statements — the annual turnover or revenue in the statement of comprehensive income for the relevant year.
- Without audited financial statements — the annual revenue reported in the tax return for the relevant year of assessment.
One rule catches sole proprietors out. If you run more than one sole proprietorship, the turnover of all businesses registered under your name is added together for this test. Three businesses at RM750,000, RM820,000 and RM1,540,000 total RM3.11 million — over the threshold, even though no single business comes close.
The three conditions that cancel it
Being under RM3 million is not enough on its own. The exemption does not apply to a taxpayer:
| The condition | What it means in practice |
|---|---|
| A non-individual shareholder (or equivalent) with annual turnover or revenue of at least RM3 million | A company owns part of you, and that company is above the threshold |
| Being a subsidiary of a holding company with annual turnover or revenue of at least RM3 million | Your parent is above the threshold |
| Having a related company or joint venture with annual turnover or revenue of at least RM3 million | A company connected to you by shareholding or control is above the threshold |
A small subsidiary of a larger group is the clearest case: if your holding company's annual turnover or revenue is at least RM3 million, you do not qualify for the exemption no matter how modest your own revenue is.
When companies count as "related"
This is where most of the confusion sits, and LHDN has been specific about it. "Related company" takes its meaning from section 2 of the Promotion of Investments Act 1986, and for e-invoicing purposes LHDN applies the related-company test based on shareholding and control:
| Situation | Related for e-invoicing? |
|---|---|
| A company holds at least 20% of your issued share capital | Yes |
| A company holds less than 20% but controls your operations | Yes — control matters, not just the percentage |
| The same individual owns both companies, even 100% of each | Not by itself — common individual ownership alone does not establish a related-company relationship |
| A common director who holds no shares in either company | Not by itself — a common director alone does not establish a related-company relationship |
| The same individual is both shareholder and director of both | Not by itself — the individual's roles alone do not establish a related-company relationship |
Separate companies' revenues are not automatically added together for this test. Check each company's own turnover and establish whether the applicable non-individual shareholder, holding-company, related-company or joint-venture conditions are met. A qualifying relationship with a company that meets the RM3 million threshold can affect exemption eligibility.
Who else is exempt, regardless of turnover
LHDN exempts certain persons from issuing e-invoices whatever their size:
| Exempt person | Scope |
|---|---|
| Foreign diplomatic office | Ongoing |
| Individual not conducting a business | Ongoing |
| Statutory body, statutory authority and local authority | For the collection of payments, fees, charges, statutory levies, summonses, compounds and penalties under any written law |
| Statutory body, statutory authority and local authority — goods sold or services performed | Only before 1 July 2025 |
| International organisation — goods sold or services performed | Only before 1 July 2025 |
Two of those have already lapsed in part. Statutory bodies, statutory authorities, local authorities and international organisations must issue e-invoices for goods sold or services performed from 1 July 2025 onwards. If you are relying on an older summary that lists them as simply "exempt", that is no longer the full picture.
An exemption granted to a person does not flow down to entities they own: a company owned by an exempt person still implements e-invoicing on the normal timeline.
Income and payments outside e-invoicing entirely
Separately from who is exempt, some types of income and expense need no e-invoice at all:
- Employment income
- Pension
- Alimony
- Distribution of dividend in specific circumstances
- Zakat
- Contract value for buying or selling securities or derivatives traded on an exchange
- Disposal of unlisted shares, with exceptions where the disposer is a company, limited liability partnership, trust body or co-operative society
- Donations or contributions, as specified in LHDN's FAQ on donations
These are not exemptions for a business — they are categories of transaction that sit outside the system. A business in scope still issues e-invoices for everything else it does.
What being exempt does not change
Exemption relieves you of issuing. It does not put you outside e-invoicing altogether.
Your suppliers still issue e-invoices to you. A supplier who is in scope must issue you an e-invoice for what they sell you. You will receive validated documents, and you can view the ones issued to you in the MyInvois Portal — see what MyInvois is for how that works.
Your own receipts remain valid. An exempt business issues ordinary receipts, and those receipts stay valid proof of expense for the customers who buy from you. You do not have to convert them into anything.
You are not required to issue consolidated or self-billed e-invoices either. The exemption covers both, so an exempt buyer purchasing from a foreign supplier is not required to raise a self-billed e-invoice. If you later come into scope, self-billed e-invoices in Malaysia covers when that obligation starts.
Selling through a marketplace is different. Where you sell on an e-commerce platform, the obligation to issue sits with the platform, so an exempt seller still has to give the platform its details for the e-invoice it issues. E-invoicing for e-commerce sellers sets out that arrangement.
A large customer cannot force you to start early. LHDN is explicit: businesses that have already implemented e-invoicing cannot compel a taxpayer who has not reached their own mandatory date to issue one. You may continue issuing your existing documents until your date arrives.
You do not need to apply to stop. If you were already issuing e-invoices and now fall within the exemption — for example because the threshold rose to RM3 million — LHDN's General FAQ (Questions 17 to 20) says no separate application or prior approval is needed, and you may stop immediately. That applies where your turnover or revenue is below RM3 million and none of the group-company conditions above applies. You may instead continue voluntarily, and for a period in which you were exempt, LHDN has said no compliance action or penalty will be imposed even if you issued nothing (Questions 15 and 16).
You can adopt voluntarily. LHDN encourages exempt taxpayers to adopt e-invoicing anyway, and nothing stops you starting early if it suits your customers.
If you stop being exempt
Exemption is a status you can lose, and it is assessed against the years that follow, not fixed forever.
- If your turnover reaches or exceeds RM3 million, your date depends on the year it happens (General FAQ Q12 to Q14). If it reached RM3 million in year of assessment (YA) 2023, 2024 or 2025, you implement from 1 July 2026. If it reaches RM3 million in YA2026 or later, you implement from 1 January in the second year following that year of assessment. Crossing the threshold during 2026, for example, means implementing from 1 January 2028.
- If you never met the exemption criteria — a corporate shareholder, holding company or related company above the threshold — your implementation date is 1 July 2026 (or your operation commencement date, if you started trading from 2026 and that is later), the concessionary date LHDN set for taxpayers whose own turnover is below RM3 million.
- Once a mandatory implementation year has been determined by turnover reaching RM3 million, the exemption does not return. General FAQ Q104 says no exemption is granted after that year has been determined, and the taxpayer continues issuing e-invoices even if turnover is below RM3 million in later years; its example is a company that exceeded RM3 million and then fell below it. Q17 to Q20 address a different position: a taxpayer whose turnover or revenue is less than RM3 million and who meets the exemption criteria may stop issuing immediately without any application, or continue voluntarily (in the FAQ's examples, turnover stayed below RM3 million). LHDN does not spell out how the two answers interact in every case, so if your position sits between them, confirm it with LHDN or your tax agent.
That last point is the one to plan around. Crossing RM3 million is a one-way door, so a business approaching the threshold is better off preparing before it arrives than scrambling afterwards — the compliance checklist is the practical starting point.
Checking your own position
Work through these in order:
- What was your annual turnover or revenue for the relevant year, from your audited financial statements or your tax return? If you are a sole proprietor, add together every business registered in your name.
- Is that figure below RM3 million? If not, you are in scope and the question is only when.
- Does any company hold at least 20% of you, control you, own you as a subsidiary, or count as a related company or joint venture — and does that company have turnover of at least RM3 million? If yes, the exemption does not apply to you even though your own revenue is below the threshold.
- Has your turnover crossed RM3 million in any later year? If yes, work out your implementation date from the rules above — and remember it does not reverse.
If the answer is genuinely borderline, or your group structure is complicated, this is a question for your tax agent rather than a blog post. The consequence of getting it wrong runs in both directions: issuing nothing when you should, or rebuilding your invoicing for a requirement that never applied to you.
Verifying the current position with LHDN
The threshold was raised with effect from 1 September 2026 and the exemptions are reviewed and updated from time to time, and this page reflects what LHDN published as at September 2026. Before you act on it, check the primary sources:
- e-Invoice implementation timeline — carries the current exemption threshold and the phase dates
- e-Invoice Guideline and Specific Guideline — Section 1.6 of the Guideline holds the exemptions and the conditions that cancel them
- LHDN e-Invoice FAQs — the MSME section works through the group-company scenarios with examples
- LHDN e-Invoice microsite — announcements and the rest of the reference material
Related guides
- E-invoicing in Malaysia: a complete guide — the requirement, the phases and what the relaxation period allows
- LHDN e-invoice compliance: requirements and checklist — what to do once you are in scope
- What is MyInvois? — the system you will meet as a buyer, even while exempt
- Self-billed e-invoices in Malaysia — the obligation that starts when the exemption ends
- E-invoicing for freelancers and sole proprietors — the smallest end of the range
- What happens if you miss the e-invoicing deadline — if your date has already passed