In recent years, electronic invoicing (e-Invoice) has become a hot topic among Malaysian SMEs, micro businesses, and even freelancers. Since 2024, the Inland Revenue Board of Malaysia (LHDN) has been introducing e-Invoice in phases, aiming to make taxation and transaction records more transparent and efficient. A common question many small business owners ask is: “My business is so small, do I really need to follow?”
What is e-Invoice and Where Are We Now?
An e-Invoice is a digital record of a transaction between a supplier and a buyer. It eliminates the need for paper invoices by allowing businesses to generate and store machine-readable, digitised versions of invoices, making billing and payment processes faster and more efficient. e-Invoices will follow LHDN’s specified format (XML, JSON), and each transaction will be validated through LHDN’s MyInvois platform or via API integration. The rollout is being done in phases:
From 1 August 2024: Taxpayers with an annual turnover or revenue of more than RM100 million
From 1 January 2025: Taxpayers with an annual turnover or revenue of more than RM25 million and up to RM100 million
From 1 July 2025: Taxpayers with an annual turnover or revenue of more than RM5 million and up to RM25 million
From 1 January 2026: Taxpayers with an annual turnover or revenue of more than RM1 million and up to RM5 million
From 1 July 2026: Taxpayers with an annual turnover or revenue of up to RM1 million
Exemption: Businesses with annual revenue below RM500K are currently exempted.
Notably, in June 2025, LHDN also raised the blanket exemption threshold from RM150K to RM500K, further reducing the compliance burden for micro businesses.
Who Needs to Implement e-Invoice?
Whether your business needs to adopt e-Invoicing depends on your annual revenue threshold. According to LHDN guidelines, the revenue is determined as follows:
1. Taxpayers with audited financial statements
Based on the annual turnover or revenue stated in the statement of comprehensive income in the audited financial statements for the financial year 2022.
2. Taxpayers without audited financial statements
Based on the annual revenue reported in the tax return for the year of assessment 2022.
For a detailed timeline of when each revenue bracket must implement e-Invoicing, please refer to the rollout phases timeline listed above.
What About Small Businesses (< RM500K)?
If your annual revenue is below RM500K, you are currently exempted from mandatory adoption. This typically includes many small businesses such as hawker stalls, food vendors, or freelancers. However, the exemption only lasts as long as your revenue stays under the threshold.
For instance, if your business has an annual revenue of RM500,000 or more in 2024, then by 1 July 2026, you’ll need to start issuing e-Invoices.
In other words, small businesses are not permanently exempt, the exemption only applies until your business grows beyond the threshold.
If I’m Below the e-Invoice Implementation Threshold, What Should I Do?
There are two ways to look into it:
1. Wait Until the Deadline
Pros: You avoid costs in the short term, and you don’t need to overhaul your systems yet.
Cons: By waiting, you risk scrambling later. Imagine having to migrate systems, train staff, and get customers used to new invoicing formats—all at the same time. The “last minute rush” could be stressful, time-consuming, and potentially costly.
2. Start Digitalising Now
Pros: You spread out the learning curve. By gradually introducing digital tools, you and your staff can get comfortable early, familiarise with the process, and handle any unforeseen issues before it becomes mandatory.
How?
Start with a simple cloud-based accounting or invoicing software that includes e-Invoicing features compliant with LHDN’s guidelines. For example, AutoCount Cloud Accounting is fully compliant with LHDN’s e-Invoicing framework. It even comes with features like intelligent onboarding and get TIN features, allowing users to easily gather customer TIN and other required information with just a click whenever they need customer info to issue an e-Invoice.
Benefits:
- Reduce reliance on manual paperwork.
- Minimise human error and the risk of non-compliance
- Gain real-time insights into cash flow.
- Build credibility with suppliers, customers, and even banks, not just for trust, but also by maintaining clear and well-organised accounts.
Why Early Adoption Makes Sense
Beyond compliance, adopting e-Invoice early brings tangible business advantages:
Avoid last minute chaos: When your revenue grows past the threshold, you’ll already be prepared for the implementation of e-Invoicing.
Scalability: As your business grows, you won’t need to “play catch-up” with regulations, you’ll already be ahead.
Peace of Mind: You avoid the stress of last-minute adjustments and penalties.
Think of e-Invoice not just as a government requirement, but as an opportunity to future-proof your business.
The answer is clear: even if you’re only running a small business, you will eventually need to implement e-Invoice. Instead of waiting until the last minute, it’s smarter to start digitalising now.
When the time comes and others are scrambling, you’ll already be issuing invoices seamlessly and focusing on your customers. The future of business in Malaysia is transparent, efficient, and digital.
If you haven’t started yet, consider adopting a cloud accounting system with e-Invoice feature now. Getting familiar early will ensure a smooth, stress-free transition later.
This e-Invoice News series is a collaboration with AutoCount.
