LHDN e-invoice deadlines and phases by turnover

Updated 1 September 2026

Short answer

The LHDN e-invoice mandate applies by annual turnover: above RM100m from August 2024, RM25 to 100m from January 2025, RM5 to 25m from July 2025, and RM3 to 5m from 1 January 2026. Businesses under RM3 million are currently exempt, unless they meet one of 3 group-related exceptions.

The rollout by turnover

Phase	Annual turnover	Mandatory from
1	Above RM100 million	1 August 2024
2	RM25m to RM100m	1 January 2025
3	RM5m to RM25m	1 July 2025
4	RM3m to RM5m	1 January 2026
Exempt	Below RM3 million	Voluntary

Businesses under RM3 million

Businesses with annual turnover below RM3 million are currently exempt from the mandate. This threshold was raised from RM1 million to RM3 million under e-Invoice Guideline Version 4.8 (30 August 2026). They may still adopt voluntarily to claim incentives or to serve B2B customers who require e-invoices.

Some businesses below RM3 million must still comply: those with a non-individual shareholder, holding company, related company, or joint venture that has turnover of RM3 million or more. See the full exemption breakdown for the 3 exceptions.

The relaxation (grace) period

Each phase came with an interim relaxation period during which LHDN does not prosecute non-compliance, provided you are making a genuine effort, and consolidated e-invoices are allowed for all transactions. For Phase 4 (RM3m to RM5m) this relaxation has been extended to 31 December 2027, with full penalty enforcement from 1 January 2028. Treat it as time to get ready, not permission to skip.

The RM10,000 rule

From 1 January 2026, any single transaction above RM10,000 must be issued as an individual e-invoice with the buyer identified. It cannot be rolled into a consolidated e-invoice, even for a retail sale.

How to know which phase you are in

Your phase is set by annual turnover, generally referenced to your audited financial statements or tax return. If your turnover crosses a threshold, you move into the corresponding phase from its start date.

Get set up before your deadline

This is general information, not tax advice. Rules and thresholds are set by LHDN and can change. Confirm your specific situation with LHDN or your tax agent.

Frequently asked questions

When is e-invoicing mandatory for SMEs?

Businesses with RM3 million to RM5 million turnover are mandated from 1 January 2026 (Phase 4). Those above RM5 million are already mandated. Businesses under RM3 million are currently exempt, unless a group-related exception applies.

Which e-invoice phase am I in?

Your phase is determined by annual turnover: above RM100m (Phase 1), RM25 to 100m (Phase 2), RM5 to 25m (Phase 3), RM3 to 5m (Phase 4). Below RM3 million is exempt.

Is there a penalty during the grace period?

During the relaxation period LHDN does not prosecute non-compliance if you are making a genuine effort, and consolidated e-invoices are allowed for all transactions. It is time to prepare, not a permanent exemption.

What is the RM10,000 rule?

From 1 January 2026, any single transaction above RM10,000 must be issued as an individual e-invoice with the buyer identified; it cannot be consolidated.

Are businesses under RM3 million exempt from e-invoicing?

Yes, currently, for most businesses. Those below RM3 million annual turnover are exempt from the mandate and may adopt voluntarily, unless they have a non-individual shareholder, holding company, related company, or joint venture with turnover of RM3 million or more.