(Tax Update) Understanding the RM150,000 Threshold for E-Invoice Exemption in Malaysia

The implementation of e-Invoice in Malaysia has raised many questions, especially for small businesses wondering whether they need to comply. One of the key exemptions granted by the Inland Revenue Board of Malaysia (IRBM) is based on the RM150,000 annual turnover threshold. But what exactly does this mean, and are there any exceptions?

Let’s break it down.

What is the RM150,000 Threshold?

The IRBM has introduced an exemption from e-Invoice issuance for taxpayers with an annual turnover or revenue below RM150,000. This means that if your business earns less than RM150,000 in a year, you are not required to issue e-Invoices under the current framework.

This exemption is designed to ease the burden on micro and small businesses that may not have the resources to implement an e-Invoice system.

However, before you assume your business qualifies, you need to be aware of certain exceptions that disqualify taxpayers from this exemption.

Who Does Not Qualify for the Exemption?

Even if your business earns less than RM150,000 annually, you must issue e-Invoices if you fall into any of the following categories:

1️⃣ You have a non-individual shareholder (or equivalent) whose annual turnover exceeds RM150,000.

Example : Your company has an individual shareholder who owns multiple businesses, and one of those businesses earns more than RM150,000 annually. This means your company is not exempt from the e-Invoice requirement.

2️⃣ You are a subsidiary of a holding company with an annual turnover exceeding RM150,000.

Example : Your company operates independently but is owned by a parent company that generates more than RM150,000 in revenue. Since your parent company crosses the threshold, your business must comply with e-Invoice regulations.

3️⃣ You have a related company or joint venture partner whose annual turnover exceeds RM150,000.

Example : If you are part of a group of businesses or have a joint venture arrangement with another company that earns more than RM150,000, you must issue e-Invoices, even if your own revenue is lower.

Special Rule for Sole Proprietorships

Sole proprietors have a unique condition when determining their e-Invoice obligation. The RM150,000 threshold is calculated based on the combined turnover of all businesses owned by the same sole proprietor.

🔹 Example: If you operate two separate sole proprietorships—one generating RM100,000 annually and another generating RM80,000—the total revenue is RM180,000. Since this exceeds the RM150,000 limit, you must comply with the e-Invoice requirement for all your businesses.

Key Takeaways

✔️ If your total business revenue is below RM150,000, you are exempt from e-Invoice compliance—unless you fall into one of the listed exceptions.
✔️ Businesses linked to larger entities (through ownership or joint ventures) do not qualify for the exemption.
✔️ Sole proprietorships must combine all their business revenues when determining the RM150,000 threshold.

✔️ The implementation of e-invoicing is based on the latest available financial data, such as audited financial statements or tax returns, which are typically from previous years like 2022. This means that while the threshold itself is not frequently reviewed or updated, businesses are assessed based on their most recent financial data to determine if they meet or exceed the threshold.

For further details, refer to the General e-Invoice FAQ dated 4 October 2024. Staying informed on the latest e-Invoice regulations ensures compliance and avoids unnecessary penalties.

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