FAQs of e-Invoice

e-Invoice Implementation – Frequently Asked Questions (FAQs)

1. How is eligibility for e-Invoice implementation determined?
   
   Eligibility is primarily assessed based on a business’s annual revenue, in accordance with guidelines issued by the Inland Revenue Board of Malaysia (LHDN).
   
   
2. If my 2022 revenue was below RM1 million, do I need to implement e-Invoice?
   • Businesses with 2022 annual revenue below RM1 million may be eligible for exemption from mandatory e-Invoice implementation, subject to LHDN’s final determination.
   • If the business’s revenue subsequently exceeds RM1 million in 2023 or 2024, mandatory e-Invoice implementation will commence on 1 July 2026.
   
   
3. What if my revenue exceeded RM1 million after 2022?
   
   Where a business exceeds the RM1 million revenue threshold in 2023 or 2024, the obligation to implement e-Invoice will begin on 1 July 2026, not immediately upon exceeding the threshold.
   
   
4. How are new businesses established from 2023 onwards treated?
   
   For businesses that commenced operations between 2023 and 2025, even if their first-year revenue exceeds RM1 million, mandatory e-Invoice implementation will only be required from 1 July 2026, in accordance with LHDN guidelines.
   
   
5. Are there situations where exemption does not apply, even if revenue is below RM1 million?
   
   Yes. Exemption is not applicable in the following circumstances:
   • The business has a non-individual shareholder (e.g. a Sdn Bhd), and that shareholder’s annual revenue exceeds RM1 million.
   • The business is a subsidiary of a company with annual revenue exceeding RM1 million.
   • The business has a related company or joint venture with annual revenue exceeding RM1 million.


6. How is revenue calculated for businesses with multiple entities?
   
   Private Limited Companies (Sdn Bhd)
   • Each company is assessed individually. The e-Invoice threshold is applied on a per-entity basis.
   
   Sole Proprietorships (Enterprises)
   • Revenue from all Enterprises under the same individual must be aggregated. If the combined revenue exceeds
     RM1 million, e-Invoice implementation is required for all such Enterprises.


7. Can a business stop issuing e-Invoices if its revenue later falls below RM1 million?
   
   No. Once a business has commenced e-Invoice implementation, the obligation continues on an ongoing basis, regardless of any subsequent decline in revenue, including cases where revenue falls to zero.
   
   
8. What are the potential consequences of non-compliance?
   
   Failure to comply with e-Invoicing requirements may give rise to penalties ranging from RM200 to RM20,000 and/or imprisonment, as prescribed under the relevant provisions of Malaysian tax legislation.
   
   
9. Should businesses rely solely on this FAQ for compliance decisions?
   
   No. This FAQ is intended to provide general guidance only. Final obligations are subject to LHDN’s official guidelines, interpretations, and updates. Businesses are advised to seek professional advice based on their specific circumstances.
   
   
10. Is the RM1 million threshold assessed annually or cumulatively?
    
    The RM1 million threshold is assessed based on annual revenue for the relevant year of assessment, in accordance with IRBM’s prescribed rules. Businesses should monitor revenue levels on an ongoing basis to assess future implementation timelines.
    
    
11. Does e-Invoicing replace existing invoicing or accounting systems?
    
    No. e-Invoicing does not replace a business’s accounting system. Rather, it requires integration or alignment between the existing invoicing process and IRBM’s e-Invoicing platform or approved mechanisms, to ensure compliant issuance and reporting.

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