E-Invoice Exemption Is Now RM 3 Million: Who Is Out, Who Stays In, and What To Do If You Already Started

If you run a business under RM 3 million a year, the e-invoice deadline you were bracing for has moved off your calendar. On 30 August 2026, in the National Day Premier Address, the Prime Minister announced that the exemption threshold rises from RM 1 million to RM 3 million in annual turnover, effective 1 September 2026. LHDN put it in one sentence: MSMEs with an annual income or sales of less than RM 3 million will not be required to implement e-invoicing.

That is the second raise in a year. The threshold went from RM 500,000 to RM 1 million on 1 January 2026, and now to RM 3 million eight months later. LHDN says more than 1.1 million businesses fall under the new exemption. The updated HASiL e-Invoice Guideline, version 4.8, carries the same date as the announcement.

Here is the plain-English version of what changed, what did not, and what to do depending on where your business sits.

What changed

One number. The exemption line is RM 3 million in annual turnover instead of RM 1 million.

Everything hangs off that number, so the knock-on effects are wider than they look:

• Phase 4 now covers RM 3 million to RM 5 million, not RM 1 million to RM 5 million. The date is unchanged: mandatory since 1 January 2026, with the penalty-free grace period running to 31 December 2027 and full enforcement from 1 January 2028.
• The related-company test moved with it. A corporate shareholder, holding company, related company, or joint-venture partner now has to turn over RM 3 million or more before it pulls you into scope. A shared individual owner or a common director still does not count.
• The lookback moved with it. Whether you are in or out is judged against RM 3 million in the 2023, 2024, and 2025 assessment years, not just this year's number.

What did not change

Three rules that catch people out every time the threshold moves. Read them before you tell your accountant to switch anything off.

Once in, always in. If your turnover reached RM 3 million in any one of 2023, 2024, or 2025, you are in scope now, even if this year is quieter. And once a business is mandated, it stays mandated. A dip below the line later does not release you.

Grace is not exemption. Between RM 3 million and RM 5 million you are inside Phase 4. The grace period to 31 December 2027 waives the penalty, not the obligation. You are expected to be issuing.

The RM 10,000 rule still bites. During the relaxation period, consolidated monthly e-invoices are fine for most sales, but any single transaction of RM 10,000 or more needs its own e-invoice straight away.

That is the question everyone is asking, and it deserves a straight answer.

The one question LHDN has not answered

If you turn over between RM 1 million and RM 3 million, you were mandated on 1 January 2026. Many of you did the work: registered on MyInvois, set up the invoicing process, trained the staff, and have been issuing for eight months. Now the line has moved above you.

Can you stop?

As of mid-September 2026, LHDN has not said. Industry groups have asked for clarification on exactly this point, and the guideline is silent on businesses that implemented under the old threshold and now sit under the new one. The "once in, always in" rule has only ever been applied to revenue dipping below the line, never to the line itself being raised.

Our advice, and it is the same advice every practitioner we know is giving: keep issuing until LHDN tells you otherwise. Switching off is a decision you can make in an afternoon once the guidance lands. Switching back on after a penalty notice is not.

There is also a practical reason to keep going. Your larger customers still have to issue and receive e-invoices, and several will keep asking you for a validated e-invoice regardless of your own status. A supplier that can produce one on request is easier to do business with than one that cannot.

Where you sit, and what to do

Above RM 5 million. Nothing changed for you. You have been in since your phase date. If your e-invoicing still runs on someone retyping figures into the portal, that is a process problem, and this announcement is a good excuse to fix it.

RM 3 million to RM 5 million. You are in Phase 4. Mandated since 1 January 2026, penalty-free until 31 December 2027, enforced from 1 January 2028. Use the grace period to get the process right, not to put it off. Sixteen months goes quickly.

RM 1 million to RM 3 million, already issuing. Keep issuing. Watch for the LHDN clarification. When it comes, decide with your accountant. Until then, the safest position is the one you are already in.

RM 1 million to RM 3 million, never started. You are exempt from 1 September 2026, provided the related-company test does not catch you and you did not cross RM 3 million in 2023, 2024, or 2025. Run the checker above before you relax.

Under RM 1 million. You were exempt before and you are exempt now. The related-company test still applies to you.

The part worth thinking about anyway

Every business we have helped with e-invoicing came in because of a deadline and stayed because the invoicing process itself was the mess. The e-invoice was just the thing that exposed it: quotes in Excel, invoices retyped from delivery orders, payment chased from memory.

If the new threshold takes the deadline off your calendar, you have been handed something rare: time to fix the process without a regulator watching. A proper invoicing module, in Odoo or otherwise, produces a compliant e-invoice as a side effect of doing the invoice properly. Set it up now, on your own timetable, and the next threshold move, up or down, is a non-event.

The dates are the dates. The threshold is RM 3 million. The fine print is still the fine print. Check where you sit, keep issuing if you already are, and use whatever breathing room you have to make the invoice the easy part.