LHDN e-invoice deadlines and phases by turnover
Updated 18 October 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.
The relaxation (grace) period
Each phase came with an interim relaxation period after its start date. For taxpayers with turnover up to RM5 million it runs to 31 December 2027, with full penalty enforcement from 1 January 2028. During it, LHDN's e-Invoice Specific Guideline (section 16) lets you issue a consolidated e-invoice for all transactions, put any description in it, and decline a buyer's request for an individual e-invoice. LHDN will not prosecute under Section 120 of the Income Tax Act 1967 in this period provided you file the consolidated e-invoices. The relaxation is not a pause: you still need to submit.
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
LHDN works out your phase from your 2022 figures: the turnover in your audited financial statements for financial year 2022, or the revenue in your tax return for year of assessment 2022 if you have no audited accounts. Once your date is set, a later change in turnover does not move it.
- Businesses that started between 2023 and 2025 with turnover of at least RM3 million: mandatory from 1 July 2026.
- Businesses starting in 2026 or later: mandatory from 1 July 2026 or the day they start operating. If the first year's turnover is expected to be under RM3 million, the date is 1 January of the second year after the year turnover reached RM3 million.
Get set up before your deadline
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 will not prosecute under Section 120 of the Income Tax Act 1967, provided you file the consolidated e-invoices. Consolidation is allowed for all transactions in that period. 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.