LHDN e-invoice penalties: fines and enforcement
Updated 15 August 2026
Short answer
Failing to issue an e-invoice is an offence under Section 120(1)(d) of the Income Tax Act 1967: a fine of RM200 to RM20,000, imprisonment of up to six months, or both, per offence, meaning per e-invoice not issued.
The penalty
Under Section 120(1)(d) of the Income Tax Act 1967, failing to issue an e-invoice is an offence carrying a fine of RM200 to RM20,000, imprisonment for up to six months, or both.
"Per offence" means per invoice
The penalty applies to each non-compliance, not once overall. A business that skips many e-invoices is exposed to the fine repeatedly, so the risk scales with volume.
Who faces enforcement now
Businesses above RM5 million turnover (Phases 1 to 3) are past their relaxation periods and are subject to enforcement now. Phase 4 (RM1m to RM5m) is inside its relaxation window, which runs to 31 December 2027 with full enforcement from 1 January 2028; during it LHDN does not prosecute non-compliance if a genuine effort is being made.
The grace period is not a free pass
The relaxation defers prosecution; it does not remove the obligation. Once the window closes, unissued e-invoices for that period can still be a problem, and there is no time to build a process retroactively. Getting set up early is the cheapest form of insurance.
How to stay compliant
- Issue e-invoices for every in-scope transaction, or consolidate B2C sales correctly.
- Handle failed submissions: keep the LHDN error and retry, rather than dropping the invoice.
- Cancel within the 72-hour window when a correction is needed.
- Use a tool that logs every submission so you can prove compliance if audited.
Frequently asked questions
What is the penalty for not issuing an e-invoice in Malaysia?
Under Section 120(1)(d) of the Income Tax Act 1967, it is a fine of RM200 to RM20,000, imprisonment of up to six months, or both, per offence.
Is the fine per invoice or one flat penalty?
It applies per offence, meaning per e-invoice not issued, so the exposure scales with the number of missed invoices.
Can I be fined during the grace period?
During the relaxation period LHDN does not prosecute non-compliance if you are making a genuine effort. The obligation still exists; only prosecution is deferred.
Which law governs e-invoice penalties?
Section 120(1)(d) of the Income Tax Act 1967 covers failure to issue an e-invoice.
What should I do if a submission to LHDN fails?
Keep the LHDN error response and retry, rather than dropping the invoice. Network or transient failures usually succeed on retry; validation errors (bad TIN, missing fields) need a fix first.