In a significant policy shift aimed at easing digital compliance for micro and small enterprises, Malaysia’s government has announced that companies with annual revenue below RM1 million will be exempt from the mandatory e-invoicing requirement under the Inland Revenue Board’s MyInvois framework. This change, announced by Prime Minister Datuk Seri Anwar Ibrahim, is part of broader efforts to balance digital tax administration with the operational realities of smaller businesses.
What Changed?
The exemption threshold for mandatory e-invoicing has been raised from RM500,000 to RM1 million in annual revenue, taking effect from the start of 2026. Under the updated rules, businesses earning below this threshold are no longer required to adopt e-invoicing for compliance with tax reporting systems.
This adjustment responds directly to feedback from micro, small and medium enterprises (MSMEs) that the cost and complexity of implementing e-invoicing technologies posed a disproportionate burden on their operations.
Why It Matters for SMEs
For many small enterprises — including sole proprietors, small retailers, freelancers, and service providers — this exemption removes an immediate compliance requirement that would have required investment in digital invoicing systems, staff training, and workflow changes. The exemption allows these businesses to continue using traditional invoicing methods without penalty, enabling them to focus resources on core activities like growth and customer service.
Broader Policy Context
This move is part of a phased national strategy to modernise Malaysia’s tax administration through digitalisation. Larger firms and those with higher revenue thresholds are still expected to adopt e-invoicing as part of the rollout, which has been extended and adjusted to give businesses more time to comply. Recent extensions for firms with RM1 million to RM5 million in annual sales further reflect government attempts to reduce compliance pressure without compromising long-term digital tax objectives.
Business Community Reaction
Industry groups and SMEs have broadly welcomed the exemption, seeing it as a pragmatic adjustment that acknowledges the financial and operational constraints faced by smaller companies. At the same time, some commentators emphasise that businesses — even if legally exempt — may eventually benefit from preparing for the digital transition to stay competitive and align with corporate partners’ invoicing practices.
Source : NST