Do I need e-Invoice? Check if your business is exempt under RM3 million

What is the RM3 million exemption?

A business with annual turnover or revenue of less than RM3 million is exempt from e-Invoice from 1 September 2026, per the HASiL media release of 30 August 2026 and Section 1.6.1(e) of LHDN's e-Invoice Guideline Version 4.8. "Annual turnover" here means your total sales or gross revenue for the year, not your net profit after costs.

The threshold has been raised more than once. It went from RM500,000 to RM1 million after the Prime Minister's announcement, reported on 6 December 2025 and confirmed in a HASiL media release on 31 December 2025. The government then raised it from RM1 million to RM3 million, with effect from 1 September 2026, as announced on 30 August 2026. The threshold applies across every e-Invoice phase, not only Phase 4. For the full history and every phase date, see the e-Invoice deadlines guide.

When does the exemption not apply?

Turnover under RM3 million is not enough on its own. Under Section 1.6.10 of the Guideline, the exemption does not apply if your business has any of these with annual turnover of RM3 million or more:

• A non-individual shareholder, for example a company that holds shares in your company.
• A holding company, if your company is its subsidiary.
• A related company or a joint venture.

If one of these applies, a larger company in the same group removes your exemption. Check this before you decide you are exempt.

How do I check if my turnover has reached RM3 million?

The easiest start is your audited financial statements or your income tax return for the year of assessment in question. These are the same sources LHDN uses. LHDN takes the turnover figure from the statement of comprehensive income in your audited financial statements for that year. If you have no audited statements, LHDN uses the revenue you reported in your income tax return for that year of assessment (LHDN General FAQ question 101). The test uses gross sales or revenue, not profit.

Which year of assessment counts depends on when your business started. LHDN General FAQ question 12 (in operation in YA2022), question 13 (started between YA2023 and YA2025) and question 14 (started from YA2026) explain each case with examples. If you are a sole proprietor with more than one business, the sales of all of them are added together for this test (question 102). Check with your accountant if your business is close to the RM3 million line.

I was in Phase 4 but my sales are under RM3 million. What now?

If your sales are under RM3 million and you meet the exemption criteria, the higher threshold also covers the past. A business that was due to start on 1 January 2026 or 1 July 2026 under the old RM1 million line, and did not issue e-invoices, faces no compliance action or penalty. You can stop issuing e-invoices at once, with no application to LHDN, and you do not need to join the e-Invoice Special Voluntary Disclosure Programme (SVDP) (LHDN General FAQ questions 15 to 20, updated 4 September 2026). You can also continue to issue e-invoices voluntarily.

What if I am not exempt?

Phase 4, for businesses with turnover of RM3 million to RM5 million, has applied since 1 January 2026. The interim relaxation period for the up to RM5 million band runs until 31 December 2027. During that period LHDN does not prosecute under Section 120 of the Income Tax Act 1967, but only if you meet the consolidated e-invoice conditions (e-Invoice Specific Guideline Version 4.9, sections 16.2(a) and (b) and 16.3). Without those conditions, the relief does not apply.

You submit e-invoices through the LHDN MyInvois system, either on the MyInvois portal directly or through software that connects to it. For how the system works and how to prepare, see the MyInvois guide.

How can Lejar help?

Lejar keeps live books: the AI reads your bank statement and drafts the journal entries, and you approve each one before it posts. Your turnover is then clear at any time, so you do not have to guess how close you are to the RM3 million line. MyInvois e-invoicing is live in Lejar, free on every plan, including Free.