The Real Question Is Not "Am I Exempt?"
Most business owners searching for e-Invoice exemptions are hoping for a get-out-of-jail-free card. An annual revenue figure below which they never need to register on MyInvois. A business type that LHDN forgot to include.
That card does not exist.
LHDN's e-Invoice mandate covers all registered businesses in Malaysia — sole proprietors in Penang, contractors in Johor Bahru, Sdn Bhd companies in Kuala Lumpur. If you carry on a business and earn commercial income, you are in scope.
The more useful question is: which specific transactions bypass the MyInvois requirement? That one has a real answer — and a list worth bookmarking.
Turnover Threshold Rules — Phase Status in 2026
LHDN's phased rollout was based on annual turnover. By mid-2026, all three phases have passed their mandatory dates. Here is the current status:
| Phase | Annual Turnover | Mandatory From | 2026 Status |
|---|---|---|---|
| Phase 1 | Above RM100 million | 1 August 2024 | Mandatory. Grace period ended ~January 2025. |
| Phase 2 | RM25 million – RM100 million | 1 January 2025 | Mandatory. Grace period ended ~June 2025. |
| Phase 3 | Below RM25 million | 1 July 2025 | Mandatory. Grace period extended to ~January 2026. |
Phase 3 covers the vast majority of Malaysian SMEs — the kedai in Shah Alam, the freelancer in Subang Jaya, the F&B operator in Ipoh. If your annual revenue is below RM25 million, Phase 3 is your mandate.
One important clarification: LHDN has not announced a permanent lower-threshold exemption for micro-businesses. There is no published rule that says "below RM150,000 you never need to comply." If you are SSM-registered with business income, assume you are in scope — regardless of how small your operation is.
If you haven't registered yet, read our MyInvois portal registration guide to get started.
Who Is Genuinely Exempt From the Entire System
Only one category of taxpayer is fully exempt from ever needing to register on MyInvois: individuals who carry on no business activity.
If your income is entirely from employment — salary, bonus, allowances paid by your employer — and you have no SSM-registered business, the e-Invoice mandate does not apply to you at all. You're a salaried taxpayer, not a business operator.
Your employer does not issue you an e-Invoice for your salary. You do not issue an e-Invoice for your work. The relationship is governed by employment law and EA Forms, not MyInvois.
Everyone else — every business entity, every trader, every freelancer operating under an SSM-registered name — is in scope. No exceptions based on age, industry, or how informally you run your business.
LHDN's Transaction Exemption List — What Bypasses MyInvois
Even if your business must comply with e-Invoice, not every payment you send or receive needs to go through MyInvois. LHDN's implementation guidelines specifically exempt the following income types and transactions from the e-Invoice requirement:
| Transaction Type | Exempt? | Correct Document Instead |
|---|---|---|
| Salary, wages, bonuses paid to employees | Yes — permanently exempt | Payslip / EA Form |
| EPF, SOCSO, EIS employer contributions | Yes — permanently exempt | Statutory payment receipts |
| Dividend payments to shareholders | Yes — permanently exempt | Dividend warrant / distribution notice |
| Zakat and fitrah | Yes — permanently exempt | Zakat receipt from state zakat body |
| Government grants and direct subsidies | Yes — permanently exempt | Government payment voucher |
| Alimony / maintenance payments (court-ordered) | Yes — permanently exempt | Court order documentation |
| Loans and advances received | Yes — not a supply of goods/services | Loan agreement / facility letter |
| Disposal of securities listed on Bursa Malaysia | Yes — exempt | Broker contract note |
| Interest income on personal savings accounts | Yes — exempt (personal, not business income) | Bank statement |
These exemptions are permanent and apply regardless of the amount involved. Paying your staff RM80,000 in salary this month? No e-Invoice needed. Distributing RM500,000 in dividends to your shareholders? No e-Invoice needed. These transactions fall entirely outside the MyInvois system.
The logic is consistent: e-Invoice applies to commercial transactions for goods and services between businesses and their customers. Employment relationships, investment returns, and statutory obligations are governed by separate documentation frameworks.
B2C Transactions Under RM200 — The Consolidated Invoice Rule
This is where retail, F&B, and petty trade businesses get confused — and relieved.
LHDN does not require you to issue an individual e-Invoice to every customer for small-value retail transactions. If your business serves individual consumers (B2C) and each transaction is below RM200, you can issue a consolidated e-Invoice at the end of each day covering all those transactions combined.
The consolidated e-Invoice is issued to "General Public" — not to each individual customer. This is exactly what saves a busy nasi lemak stall from issuing hundreds of individual e-Invoices per day.
Key conditions:
- Each individual transaction value must be below RM200
- The customer must not have specifically requested an individual e-Invoice
- The business must be serving end consumers (B2C), not other businesses (B2B)
- The consolidated e-Invoice must still be submitted to MyInvois — it is not an exemption from the system, just a simplified path
If any customer — even a retail walk-in — specifically requests an individual e-Invoice with their TIN, you must issue one. That overrides the consolidated option immediately.
For B2B transactions, there is no consolidated option. Every sale to a business buyer that requests an e-Invoice requires an individual MyInvois document with the buyer's TIN.
Selling to Overseas Buyers
Export sales are not exempt from e-Invoice. If you sell goods or services to a foreign company or individual without a Malaysian TIN, you still need to issue an e-Invoice through MyInvois.
LHDN's solution for this: use the placeholder buyer TIN "EI00000000010" for non-Malaysian buyers. This allows MyInvois to validate and accept the e-Invoice without requiring a real Malaysian taxpayer ID from your overseas customer.
Your export documentation — commercial invoice for customs, shipping documents, certificates of origin — remains completely separate. The e-Invoice is the LHDN compliance document. Both sets of paperwork are required for cross-border transactions. Don't conflate them.
What "Exempt" Doesn't Mean — Two Myths to Kill
Myth 1: "I'm a small business so I'm permanently exempt."
LHDN's phased rollout was about implementation timing, not permanent exemptions. Phase 3 brought everyone below RM25 million into scope from July 2025. There is no published rule that permanently exempts businesses below any specific revenue floor. Small does not mean exempt.
Myth 2: "My supplier doesn't use e-Invoice so I don't need to either."
Your obligation is independent of your supplier's compliance status. If you are in scope, you must register and issue e-Invoices for your own sales — regardless of whether the people you buy from are compliant. Non-compliance by others does not transfer exemption to you.
If you're genuinely uncertain about your situation, a short consultation with a registered tax agent or accounting firm is the fastest path to clarity. Read our e-Invoice penalty guide to understand what's at stake if you get it wrong.
Not sure if your transactions are exempt — or just haven't set up MyInvois yet?
We can review your business structure, confirm your compliance position, and help you get registered before LHDN comes looking.
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FAQ — E-Invoice Exemptions Malaysia
Am I exempt from e-Invoice if my annual revenue is below RM150,000?
No formal permanent exemption exists for this threshold. Phase 3 covers all businesses below RM25 million — which includes micro-businesses. LHDN has not published a lower turnover floor that provides a permanent waiver. If you're registered with SSM and earn business income, assume you must comply.
Do employees need to issue e-Invoices for their salary?
No. Employment income is permanently exempt. Employees don't issue e-Invoices for their salary; employers don't issue e-Invoices for payroll. Payslips and EA Forms remain the correct documentation for employment income.
Does paying salary to my staff require an e-Invoice?
No. Salary, wages, bonuses, EPF, SOCSO, and EIS payments to employees are all permanently exempt. The exemption applies on both sides — the employer paying and the employee receiving. Continue using payslips and statutory receipts as normal.
Are dividends paid to shareholders exempt from e-Invoice?
Yes. Dividend distributions from a company to its shareholders are permanently exempt. Use dividend warrants and corporate distribution notices — not MyInvois. Interest on personal savings accounts is also exempt.
For B2C transactions under RM200, do I need individual e-Invoices?
No, if the customer doesn't specifically request one. LHDN allows a daily consolidated e-Invoice covering all B2C transactions below RM200 per transaction, issued to "General Public." You still submit it to MyInvois — it's a simplified path, not an exemption from e-Invoice entirely.
If my buyer is overseas, am I exempt from e-Invoice?
No. Export sales are not exempt. Use the placeholder buyer TIN "EI00000000010" for non-Malaysian buyers without a local TIN. Your export customs documentation remains separate.
Are government bodies and statutory bodies exempt?
If you are selling to a government entity, you still need to issue an e-Invoice — the government buyer is not exempt from receiving one. Government bodies collecting fees for their own services are on a separate LHDN rollout timeline separate from the commercial Phases 1–3.
Are inter-company transactions between related companies exempt?
Pure consolidation accounting entries may not require e-Invoices. But genuine commercial transactions within a group — management fees, service charges, goods sold — do require e-Invoices. Confirm with your tax agent before assuming any intra-group payment is exempt.