🎯 Quick Answer: Is My Business Exempt?
Generally, yes — if your annual turnover or revenue is below RM3 million and you meet the applicable exemption criteria.
However, certain ownership and corporate-relationship conditions can mean that a business below RM3 million is still required to implement e-Invoice. So don't check your sales revenue alone — you should also check the following:
💡 The new rule should not be read as "every business below RM3 million is automatically exempt." The correct reading is: "a business below RM3 million may be exempt if it satisfies the applicable exemption criteria." This matters especially for companies that are part of a larger corporate group.
📊 What Changed From RM1 Million to RM3 Million?
Previously, businesses exceeding the applicable RM1 million annual turnover or revenue threshold could fall within the mandatory e-Invoice implementation requirements. Following the Government's latest announcement, the exemption threshold has been increased to RM3 million.
This means businesses with annual turnover or revenue below RM3 million may now qualify for exemption, subject to LHDN's exemption conditions — sparing many small businesses from spending time and resources on immediate e-Invoice implementation.
"A business below RM3 million may be exempt if it satisfies the applicable exemption criteria" — not automatic exemption for everyone under the threshold.
🔍 Who Is Exempt Under the RM3 Million Threshold?
A taxpayer with annual turnover or revenue below RM3 million can qualify for the exemption, subject to conditions. However, LHDN identifies three circumstances where the exemption does not apply.
🏦 Non-individual shareholder with revenue ≥ RM3 million. Example: Company A earns RM1.8 million but its shareholder, Company B, earns RM5 million — Company A may not qualify simply because it earns less than RM3 million itself.
🏢 Subsidiary of a larger holding company. Example: Small Sdn Bhd earns only RM400,000, but its holding company earns RM10 million — the subsidiary cannot assume its own low revenue qualifies it for exemption.
🔗 Related company or joint venture with revenue ≥ RM3 million. Business owners with multiple companies should review the full ownership and control structure, not just one entity's revenue.
📖 Per the official LHDN e-Invoice FAQ (Q99), a company holding at least 20% of issued share capital in another company is treated as a related company — and even below 20%, companies can still be related if there is agreed control over operations. However, where two companies share only a common individual shareholder or a common director with no shareholding, they are generally not treated as related companies for e-Invoice purposes.
🧮 Sole Proprietor With Several Businesses?
This is one of the most important points for sole proprietors: if an individual owns multiple sole proprietorship businesses, the revenue of all of those businesses is combined when determining the RM3 million threshold.
| Business | Annual Revenue (RM) |
|---|---|
| Restaurant | 900,000 |
| Trading business | 850,000 |
| Online business | 1,400,000 |
| Total | 3,150,000 Exceeds RM3m |
Although none of the individual businesses exceeds RM3 million, the combined revenue of RM3.15 million means the sole proprietor cannot treat each business separately for threshold purposes.
❓ Does each sole proprietorship get a separate RM3 million exemption?
No. Where an individual owns multiple sole proprietorship businesses, the relevant turnover or revenue is aggregated for determining the RM3 million threshold.
🛑 I Already Started e-Invoice. Can I Stop Now?
If your business is now eligible for the RM3 million exemption — yes.
This is particularly relevant for businesses that started e-Invoice because they previously fell within the RM1 million threshold.
LHDN's latest FAQ states that an eligible taxpayer may discontinue issuing e-Invoices immediately. There is no requirement to submit a separate application or obtain prior approval from LHDN/IRBM to enjoy the exemption.
📢 What If I Didn't Start e-Invoice When I Was Supposed To?
This is another major concern for businesses affected by the previous RM1 million threshold. LHDN's FAQ gives the example of a sole proprietor with annual revenue of RM2.9 million who had an implementation date but had not started issuing e-Invoices.
✅ Following the increase of the exemption threshold to RM3 million, LHDN clarifies that where the taxpayer now qualifies for the exemption, no e-Invoice compliance action or penalty will be imposed. The taxpayer may still choose to implement e-Invoice voluntarily.
This same logic applies whether the missed e-Invoices relate to normal invoicing or to the e-Invoice Special Voluntary Disclosure Programme (SVDP) — taxpayers who qualify for the RM3 million exemption are not required to participate in the SVDP for those omitted e-Invoices.
If your revenue is between RM1 million and RM3 million, reassess your position under the latest rules instead of assuming you are still subject to the previous requirement.
📈 What Happens When My Business Exceeds RM3 Million?
The exemption is not necessarily permanent. Once your annual turnover or revenue reaches or exceeds RM3 million, e-Invoice implementation becomes applicable starting from 1 January in the second year following the Year of Assessment (YA) in which the RM3 million threshold is reached.
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⚠️ Common misconception: if your business exceeds RM3 million, becomes subject to e-Invoice, and revenue then falls back below RM3 million the following year — you cannot stop. Once the mandatory implementation year has been determined, subsequently falling below RM3 million does not restore the exemption. The threshold is not a yearly "on/off switch" once mandatory implementation has been triggered.
🤝 Should I Continue Using e-Invoice Voluntarily?
It depends on your business needs. LHDN allows eligible taxpayers to continue implementing e-Invoice on a voluntary basis. There can be good operational reasons to do so:
However, if your main concern is simply whether you must issue e-Invoice, an eligible taxpayer below RM3 million may qualify for the exemption and is not obligated to do so.
✅ RM3 Million Exemption Checklist
Before deciding that your business is exempt, work through this checklist.
Is your annual turnover or revenue below RM3 million? If yes, continue checking the criteria below.
Do you have a non-individual shareholder (or equivalent) with annual turnover or revenue of at least RM3 million?
Are you a subsidiary of a holding company that meets the RM3 million threshold?
Do you have related companies or joint ventures that may affect your exemption status?
If you are a sole proprietor with multiple businesses, have you aggregated the relevant revenue?
Have you already become subject to mandatory e-Invoice? If yes, don't assume falling below RM3 million later lets you stop.
⚖️ Quick Comparison
| Situation | e-Invoice Position |
|---|---|
| Revenue below RM3 million and exemption criteria met | Generally exempt Exempt |
| Revenue below RM3 million but exemption condition not met | May still be mandatory Mandatory |
| Already mandatory, revenue later falls below RM3 million | Must continue Mandatory |
| Eligible taxpayer already issuing e-Invoice | May discontinue immediately |
| Eligible taxpayer wants to continue voluntarily | Allowed |
| Sole proprietor owns several businesses | Revenue is aggregated |
| Revenue reaches RM3 million | e-Invoice applies per implementation rules |
📋 What Should Businesses Do Now?
The increase from RM1 million to RM3 million could significantly change your e-Invoice obligations. If your business has revenue between RM1 million and RM3 million, now is a good time to review your position. Don't simply uninstall your accounting software or stop your e-Invoice process based on the headline figure alone — confirm the following first:
Once these are checked, you can determine whether your business should (A) continue with e-Invoice, (B) stop mandatory e-Invoice because you qualify for the exemption, or (C) continue voluntarily to prepare for future growth.
The RM3 Million Exemption Advantage
The updated exemption threshold can reduce immediate e-Invoice compliance pressure for eligible businesses. If your annual turnover or revenue is below RM3 million, review the applicable exemption criteria before deciding your next step.
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