Malaysia raised the e-invoice exemption threshold from RM1 million to RM3 million in annual revenue, effective 1 September 2026. If your wholesale or distribution business made RM3 million or less in the relevant assessment year, you are not currently required to issue e-invoices through the Inland Revenue Board of Malaysia's (LHDN) MyInvois system, though you can still register voluntarily.
The change was announced by Prime Minister Anwar Ibrahim during Malaysia's National Day address on 30 August 2026 and confirmed by LHDN days later. For wholesalers near the old or new line, the real question is how to confirm the e invoice Malaysia wholesale exemption status with certainty, and what to do if revenue crosses it later.
Key takeaways
- The e-invoice exemption threshold rose from RM1 million to RM3 million in annual revenue, effective 1 September 2026.
- Wholesalers below RM3 million do not need to issue e-invoices yet, but should keep normal tax records and can register voluntarily.
- Status is checked against audited annual revenue for the relevant assessment year, not a single strong or weak month.
- Once a business enters a mandatory phase, it is generally expected to keep complying even if revenue later falls.
- Confirm your exact status directly through LHDN's MyInvois portal or a licensed tax agent rather than relying on any single article.
What is the e-invoice exemption threshold in Malaysia?
The e-invoice exemption threshold is the annual revenue figure below which a business does not have to issue electronic invoices under Malaysia's mandatory e-invoicing regime. As of 1 September 2026, that figure is RM3 million, up from RM1 million. During the National Day address at the Putrajaya International Convention Centre, Anwar said: "We have agreed to raise the e-Invoice exemption threshold from RM1mil to RM3mil," as reported by The Star.
How the threshold applies to wholesale distributors
Electronic invoicing (e-invoicing) replaces paper and PDF invoices with a digital record submitted through LHDN's MyInvois system or a connected application programming interface (API), so tax authorities receive transaction data close to real time. For a wholesale distributor, that would normally cover every sales order, delivery order and invoice issued to a retailer or dealer once the company is in scope. Below RM3 million, that obligation does not currently apply.
Why did the government raise the e-invoice exemption threshold?
The government raised the threshold to cut compliance costs and administrative burden for smaller businesses. LHDN stated that "MSMEs with an annual income or sales of less than RM3mil will not be required to implement e-Invoicing," adding that the move "reflects its concern in easing the compliance burden and costs borne by MSMEs," according to The Star.
How many businesses are affected
The change is expected to benefit more than 1.1 million micro, small and medium enterprises (MSMEs) nationwide, based on LHDN figures reported by The Edge Malaysia. That makes exemption the default position for most small wholesalers rather than an exception.
How does Malaysia's e-invoicing implementation timeline work?
Malaysia rolled out e-invoicing in phases by annual turnover, largest taxpayers first. Each phase has a mandatory start date and a relaxation period with reduced penalties while businesses adjust, according to ClearTax's phase guide.
| Phase | Annual turnover | Mandatory from | Relaxation period ends |
|---|---|---|---|
| Phase 1 | Above RM100 million | 1 August 2024 | 31 January 2025 |
| Phase 2 | RM25 million to RM100 million | 1 January 2025 | 30 June 2025 |
| Phase 3 | RM5 million to RM25 million | 1 July 2025 | 31 December 2025 |
| Phase 4 | RM1 million to RM5 million | 1 January 2026 | Check current date with LHDN |
Where the RM3 million exemption fits in
The RM3 million exemption sits inside Phase 4's original RM1 million to RM5 million band. A wholesaler between RM3 million and RM5 million stays in scope under Phase 4; one below RM3 million is exempt regardless of the phase. LHDN's current guideline on hasil.gov.my is the authoritative source for exact dates, since deadlines have shifted more than once since 2024.
Who is exempt from e-invoicing in Malaysia?
Any wholesale or distribution business with annual revenue of RM3 million or less is exempt from mandatory e-invoicing as of 1 September 2026. Businesses above that figure remain subject to whichever phase their turnover places them in, and once in a mandatory phase, a business is generally expected to keep complying even if revenue later drops, per guidance summarised by ClearTax.
How the threshold is measured
LHDN determines eligibility from audited financial statements or annual revenue for the relevant assessment year, not a single strong or weak month. A wholesaler with seasonal swings, common in hardware, building materials and fast moving consumer goods (FMCG) distribution, should use its full-year figure, not an interim estimate.
How can a wholesale distributor check its exemption status?
Confirm exemption status in three steps: pull the latest audited revenue figure, compare it against the RM3 million threshold, and confirm through LHDN's own channels.
1. Check your audited annual revenue
Use the total revenue from your most recent audited financial statements or tax filing, not a management estimate, since this is the figure LHDN references if status is ever queried.
2. Compare it against RM3 million
If audited annual revenue is RM3 million or below, your business currently falls under the exemption. If it is above, check which turnover band and phase applies using the table above.
3. Confirm directly with LHDN
Log in to the MyInvois portal, or contact LHDN's e-Invoice help desk on 03-8682 8000 or [email protected], since thresholds and phase dates have changed more than once since August 2024.
What happens if revenue grows past the RM3 million threshold?
A wholesaler that crosses RM3 million in annual revenue moves out of the exemption and into whichever phase its new turnover falls under. This matters for distributors expanding into new territories, since a strong year can shift a business from exempt to mandatory without a matching change in daily operations.
Common mistakes wholesalers make near the threshold
- Assuming exemption is permanent, instead of reassessing it every financial year.
- Waiting until a mandatory phase starts to evaluate accounting or enterprise resource planning (ERP) systems, such as SQL Account or AutoCount, for e-invoice readiness.
- Treating one strong sales month as proof of crossing the threshold, instead of using full-year audited revenue.
Should an exempt wholesaler still prepare for e-invoicing?
Yes, in most cases. LHDN continues to encourage voluntary participation, and since e-invoicing launched in August 2024, more than 265,379 taxpayers have submitted over 1.84 billion e-invoices, according to The Star, showing the system is already standard for much of the supply chain an exempt wholesaler sells into.
A simple readiness framework
Use revenue trajectory, not just current exemption, to decide when to prepare. A wholesaler comfortably under RM1 million with flat sales has little urgency. One between RM1 million and RM3 million growing steadily may benefit from testing MyInvois or e-invoicing-ready accounting software before compliance becomes mandatory, rather than adopting it under deadline pressure.
Illustrative example: a hardware distributor with RM2.4 million in current revenue, growing at roughly 15 percent a year, would reach the RM3 million line in about two financial years. This is a hypothetical calculation used to illustrate the decision, not a reported outcome for any specific business.
Frequently asked questions
Is my wholesale business required to issue e-invoices in Malaysia?
Only if your annual revenue is above RM3 million, which places you in one of the four mandatory phases. Businesses at RM3 million or below are currently exempt, though voluntary registration through MyInvois remains open.
When did the RM3 million e-invoice exemption take effect?
The higher threshold took effect on 1 September 2026, after Anwar Ibrahim announced the increase from RM1 million during the National Day address on 30 August 2026.
How do I check my e-invoice exemption status?
Compare your latest audited annual revenue against RM3 million, then confirm the result through LHDN's MyInvois portal or its e-Invoice help desk, since your bookkeeping figure may not match the assessment year LHDN uses.
Does the exemption apply permanently once granted?
No. Exemption is tied to annual revenue, so reassess status every financial year rather than assuming a past exemption still holds, particularly if sales are growing toward RM3 million.
What if revenue drops back below RM3 million after e-invoicing starts?
Per guidance summarised by ClearTax, a business already in a mandatory phase is generally expected to keep issuing e-invoices even if revenue later falls, so compliance is not automatically reversible.
The e invoice Malaysia wholesale exemption now sits at RM3 million in annual revenue, effective 1 September 2026, up from RM1 million. If your business is below that line, you are not currently required to comply, but the threshold has moved twice in under a year, so check status against audited revenue every financial year rather than treating today's exemption as permanent. Confirm your exact position through LHDN's MyInvois portal or a licensed tax agent, and if revenue is approaching RM3 million, start evaluating e-invoicing-ready accounting software now so a future mandatory phase does not arrive as a scramble.