LHDN e-invoice penalties: fines and enforcement
Updated 18 October 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
Each phase had its own relaxation period after its start date. For taxpayers with turnover up to RM5 million, which covers Phase 4 (RM3m to RM5m), it runs to 31 December 2027, with full enforcement from 1 January 2028. During it, LHDN will not prosecute under Section 120 provided you file the consolidated e-invoices. Larger businesses in Phases 1 to 3 should confirm their own position with LHDN or their tax agent.
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.
Missed some already? The penalty-free catch-up
LHDN's e-Invoice Special Voluntary Disclosure Programme (SVDP) runs from 7 July 2026 to 31 December 2027. It covers taxpayers who missed e-invoices after their mandatory date, submitted some with errors, or submitted none for a period. For e-invoices disclosed under it, LHDN will not carry out compliance reviews or enforcement, including penalties and prosecution, provided the disclosed e-invoices meet LHDN's requirements and you act in good faith.
How to stay compliant
- Issue e-invoices for every in-scope transaction, or consolidate B2C sales correctly.
- Handle failed and rejected submissions: retry a failed one, and fix and resubmit a rejected one rather than dropping the invoice. See LHDN rejection codes.
- 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 will not prosecute under Section 120, provided you file the consolidated e-invoices. The obligation still exists; only prosecution is deferred.
I missed e-invoices after my mandatory date. Can I fix it without a penalty?
Yes. LHDN's e-Invoice Special Voluntary Disclosure Programme runs to 31 December 2027. For e-invoices disclosed under it, LHDN will not carry out compliance reviews or enforcement, provided the disclosed e-invoices meet its requirements and you act in good faith.
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, then a corrected document.