Malaysia’s e-invoicing rollout enters its fourth phase, with SMEs earning under RM1 million annually exempt from the 2026 requirement.
KUALA LUMPUR: Malaysia has entered the fourth phase of its nationwide electronic invoicing (e-invoicing) rollout.
The initiative is a key part of the government’s strategy to modernise tax administration and improve compliance.
Introduced as a digital platform, e-invoicing requires businesses to generate and submit invoices electronically to enhance reporting.
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This digital shift aims to increase tax collection efficiency while reducing revenue leakage.
The rollout began on 1 August 2024, initially covering companies with annual sales above RM100 million.
As of 4 November 2025, the Inland Revenue Board (IRB) recorded over 106,000 registered taxpayers using the system.
Transactions through the e-invoicing platform have exceeded RM675 million, reflecting growing adoption.
A significant change announced in December 2025 raised the exemption threshold for small businesses.
Prime Minister Datuk Seri Anwar Ibrahim said firms with annual revenue below RM1 million will not need to comply starting in 2026.
This exemption eases the administrative burden on small and medium enterprises (SMEs).
From 1 January 2026, businesses with transactions over RM10,000 must issue individual e-invoices instead of consolidated ones.
Electricity and telecommunications service providers will also be required to issue individual e-invoices.
Currently, seven specific industries are mandated to issue individual e-invoices.
These include automotive sales, aviation tickets, gold and luxury goods, and construction.
The licensed betting and gaming industry and payments to agents are also included.
Experts say the exemption for smaller firms provides crucial breathing room for SMEs.
Center for Market Education CEO Dr Carmelo Ferlito said it frees up resources to focus on core business and growth.
Malaysia Micro Enterprises Academy CEO Abd Azharee Abdul Wahid said it allows entrepreneurs to become more competitive.
He stated it gives businesses room to restructure strategies and explore new opportunities.
Small and Medium Enterprises Association Malaysia president Datuk William Ng supports the phased approach.
He said it ultimately benefits SMEs by creating room for reinvestment and expansion.
Ng stressed that the association does not support calls for further exemptions or postponements.
He argued that simply delaying implementation would not improve business readiness.
Anwar has said e-invoicing will be implemented comprehensively alongside other tax reforms in 2026.
The Prime Minister expressed optimism about the IRB’s performance and the new system’s efficiency.
He noted that e-invoicing has improved discipline and contributed to stronger revenue collection.
Tax collections for 2026 are projected to rise significantly with the system’s support.
Direct taxes are estimated at RM187.4 billion and indirect taxes at RM83 billion.
This growth is supported by targeted measures and sustained domestic demand. – Bernama
