Two separate rounds of relief have landed on Malaysia's e-invoicing rollout in the past seven months, and a lot of small business owners are still confused about which one applies to them.
MyInvois, LHDN's mandatory e-invoicing system, has been phasing in since August 2024 based on annual turnover, largest businesses first. If you run a smaller outfit and gave up trying to track the exact rules somewhere around Phase 3, here's what the two most recent changes actually mean.
Change one: the exemption line moved to RM1 million
On 6 December 2025, the Cabinet raised the permanent e-invoicing exemption threshold from RM500,000 to RM1 million in annual turnover, according to The Star. Businesses under that RM1 million line are no longer required to issue e-invoices at all, though they can still opt in voluntarily.
That decision also quietly killed the previously planned "Phase 5," which would have brought in businesses earning between RM150,000 and RM500,000. With the exemption line moved up, there was no longer a gap left for that phase to fill.
Change two: Phase 4's grace period pushed to 2028
Phase 4 covers businesses with annual turnover between RM1 million and RM5 million, and it technically started on 1 January 2026 as originally planned — that mandatory start date has not moved. What has moved is the grace period before penalties kick in.
On 20 April 2026, Prime Minister Anwar Ibrahim announced a further 12-month extension to that grace period as part of a wider SME relief package, according to Free Malaysia Today and Business Today. Phase 4's relaxation period now runs until 31 December 2027, meaning full penalty enforcement for non-compliance doesn't begin until 1 January 2028 — a year later than originally scheduled.
Larger businesses aren't affected by this. Phases 1 through 3 — covering turnover above RM5 million, which have been live since August 2024, January 2025 and July 2025 respectively — continue under active enforcement as before.
What this actually means if you're running a Phase 4 business
If your business earns between RM1 million and RM5 million, you're technically required to be issuing e-invoices through MyInvois as of 1 January 2026, but LHDN won't impose non-compliance penalties before 1 January 2028, provided you can show reasonable effort to transition. In practice, that gives Phase 4 businesses roughly two more years of runway to get systems, staff and suppliers actually ready, without the immediate threat of fines hanging over every invoice.
One rule doesn't bend regardless of the grace period: any single transaction of RM10,000 or more still requires an individual e-invoice to be issued immediately, rather than folded into a consolidated monthly e-invoice. That RM10,000 threshold has stayed fixed through both rounds of relief, so it's worth building into your invoicing habits now even if the rest of your compliance timeline has breathing room.
How to check which phase actually applies to you
The phase that applies to your business is based on annual turnover, usually taken from your most recent audited financial statements or tax return on file with LHDN — not your current-year projected revenue. That distinction trips people up: a business that has grown into a higher bracket this year but was smaller in its last filed accounts may still fall under an earlier phase's timeline until its turnover bracket officially updates.
If you're unsure which phase you fall under, LHDN's MyInvois portal and the e-Invoice guidelines published on the official LHDN website are the authoritative source, not third-party summaries — compliance software vendors and accounting firms have also been fairly quick to publish updated phase trackers each time a change like this lands, which can be a faster way to sanity-check your position than digging through the raw guideline documents yourself.
For newer businesses that started operating between 2023 and 2025 and have since crossed the RM1 million mark, the April 2026 relief package's Phase 4 grace period explicitly applies to them too, not just businesses that were already established before the rollout began.
FAQ
Do I need to register for e-invoicing if my business earns under RM1 million?
No. Businesses below RM1 million in annual turnover are permanently exempt from mandatory e-invoicing, though you can still register voluntarily through MyInvois if you want to.
Has the Phase 4 start date of 1 January 2026 changed?
No — the legal requirement for Phase 4 businesses (RM1 million to RM5 million turnover) to use e-invoicing still began 1 January 2026. Only the penalty enforcement date has been pushed back, to 1 January 2028.
What happens if I don't issue e-invoices during the grace period?
LHDN has said it won't impose non-compliance penalties on Phase 4 businesses before 1 January 2028, as long as the business can demonstrate reasonable effort toward adopting the system.
Does the RM10,000 rule still apply during the grace period?
Yes. Any single transaction at or above RM10,000 still requires an individual e-invoice issued immediately, regardless of the extended grace period for consolidated invoicing.
Is Phase 5 e-invoicing still happening?
No. The planned Phase 5, which would have covered businesses earning between RM150,000 and RM500,000, was cancelled after the exemption threshold was raised to RM1 million in December 2025.
If you're running a small business trying to keep more compliance costs off your books, it's also worth checking whether recent KWSP changes or shifting bank fees affect how you're budgeting for 2026 — and for businesses still under the RM1 million line, informal financing tools like kutu remain a bigger part of everyday cash flow than most compliance guides acknowledge.
