E-Invoicing Deadline Extended for SMEs Earning Below RM500K

The Malaysian government has announced a six-month extension for small and medium enterprises (SMEs) with annual sales turnover between RM150,000 and RM500,000 to comply with the e-invoicing system.

The new deadline for these SMEs is now January 1, 2026, instead of July 1, 2025.

This decision was made to help over 240,000 SMEs better prepare for the transition.

Finance Minister II, Datuk Seri Amir Hamzah Azizan, confirmed this during a Parliament session, stating that adequate preparation time is crucial for small businesses.

Updated Malaysia’s E-Invoicing Phases (20 Feb 2025)

The implementation of e-invoicing in Malaysia is happening in phases:

Phase 1 (August 1, 2024): Businesses with annual sales above RM100 million.
Phase 2 (January 1, 2025): Businesses with annual sales between RM25 million and RM100 million.
Phase 3 (July 1, 2025): Businesses with annual sales between RM500,000 and RM25 million.
Phase 4 (January 1, 2026): All businesses, including SMEs with RM150,000 to RM500,000 turnover.

However, with this extension, SMEs under Phase 3 now have until January 1, 2026 to comply.

Business Category	Original Deadline	New Deadline	Status
Sales above RM100 million	August 1, 2024	No change	E-invoicing mandatory
Sales RM25 million - RM100 million	January 1, 2025	No change	E-invoicing mandatory
Sales RM500,000 - RM25 million	July 1, 2025	No change	E-invoicing mandatory
Sales RM150,000 - RM500,000	July 1, 2025	January 1, 2026	6-month extension
Sales below RM150,000	No requirement	No requirement	Fully exempted

Why Did the Government Extend the Deadline?

Many SMEs struggled with the original July 1, 2025 deadline due to a lack of readiness and unfamiliarity with e-invoicing requirements.

Business owners requested more time to adapt to digital invoicing and integrate new systems into their operations.

Key reasons for the extension:

Many SMEs still lack the budget to implement e-invoicing systems.
Some business owners are not fully informed about e-invoicing.
SMEs need time to set up, test, and train staff on new e-invoicing software.
Business owners feared the July deadline would disrupt peak sales seasons, such as Hari Raya and year-end shopping periods.
Many businesses require time to ensure their accounting software aligns with the government’s e-invoicing platform.

Who is Exempt from E-Invoicing?

The government has also confirmed that small traders with annual sales below RM150,000 are fully exempted from e-invoicing.

This move benefits over 700,000 small traders, including hawkers, freelancers, and micro-businesses.

What Should SMEs Do Now?

Although the deadline is extended, SMEs should start preparing for e-invoicing by:

Learn about the system through government resources such as LHDN’s e-invoicing portal.
Upgrade their invoicing software to ensure compatibility with the e-invoicing system.
Attend training and workshops organized by industry associations and government bodies.
Consult with accountants to ensure smooth integration of e-invoicing with existing financial systems.

What is E-Invoicing for Business?

E-invoicing is a digital system that enables businesses to issue, transmit, receive, and store invoices electronically.

Unlike traditional paper or PDF invoices, e-invoices are created, sent, and processed digitally in a structured format, ensuring automatic validation and real-time tracking.

The implementation of e-invoicing aims to streamline business transactions, improve efficiency, and enhance tax compliance.

Why is the Government Mandating E-Invoicing?

The Malaysian government is pushing for e-invoicing adoption as part of its broader digital transformation and tax compliance strategy.

The objectives include:

Preventing Tax Evasion: E-invoicing makes business transactions clear, reducing the chance of underreporting income or avoiding taxes.
Improving Efficiency: Automation reduces errors, cuts paperwork, and speeds up invoicing, leading to faster payments and better cash flow.
Supporting Digital Economy: Digital invoicing helps Malaysia follow global trends, making local and international transactions smoother.
Helping SMEs Compete: Modern invoicing lets SMEs use digital accounting tools, making financial management easier and keeping them competitive.

Source: theedgemalaysia.com, thestar.com.my, nst.com.my

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