In an announcement today, the Inland Revenue Board (LHDN) said it will introduce new phases with updated deadlines for such businesses.
LHDN said the finance ministry has decided that the implementation of e-invoicing for taxpayers with annual income or sales between RM1 million and RM5 million (Phase IV) will be deferred to Jan 1, 2026 from the previous July 1, 2025.
“Implementation for those with annual income or sales up to RM1 million, or Phase V, will be deferred to July 1, 2026,” it said in a statement.
It added that the mandatory e-invoicing implementation date for taxpayers with annual income or sales exceeding RM5 million and up to RM25 million, or Phase III, will be July 1 this year.
“The government acknowledges the commitment of taxpayers, particularly businesses in the micro, small, and medium enterprises (MSME) category, in complying with the legal requirements of e-invoicing.
“It recognises the need for sufficient preparation time and the operational challenges faced in implementing the system,” LHDN said.
The board also said the finance ministry has agreed to exempt taxpayers with annual income or sales below RM500,000 from e-invoicing requirements for the time being.
During this period, taxpayers are allowed to issue consolidated e-invoices for transactions, including self-billed e-invoices.
“If a buyer requests an e-invoice, the seller may issue only a consolidated e-invoice, without having to issue one for each individual transaction,” it added.
LHDN reiterated that there will be no prosecution under Section 120 of the Income Tax Act 1967 for non-compliance with e-invoicing regulations during the grace period, provided the consolidated e-invoice requirements are fulfilled.
In February, the Small and Medium Enterprises Association of Malaysia (Samenta) urged the government to raise the e-invoicing exemption threshold for MSMEs to those with annual sales below RM300,000, up from the previous limit of RM150,000.
Original phases and implementation
Under Phase I, the e-invoice system was rolled out gradually from Aug 1 last year, starting with businesses with an annual turnover or revenue of more than RM100 million.
Phase II started in Jan 1 this year and applies to taxpayers with annual turnovers between RM25 million and RM100 million.
Previously Phase III was meant for all MSMEs regardless of their annual revenue with implementation to start by July 1 this year.