Malaysia’s Inland Revenue Board, or LHDN, has issued an important e-Invoice update affecting micro, small and medium businesses.

The e-Invoice Guideline Version 4.8, published on 30 August 2026, raises the exemption threshold from RM1 million to below RM3 million in annual turnover or revenue. LHDN subsequently updated its official e-Invoice FAQs on 4 September 2026 with examples relevant to MSMEs and online marketplace sellers.

Does every business below RM3 million qualify?

No. The exemption generally applies to taxpayers with annual turnover or revenue below RM3 million, including individuals, partnerships, companies and cooperatives.

However, a business may not qualify if it:

  • Has a non-individual shareholder with annual turnover or revenue of at least RM3 million
  • Is a subsidiary of a holding company with annual turnover or revenue of at least RM3 million
  • Has a related company or joint venture with annual turnover or revenue of at least RM3 million

Businesses should therefore check both their revenue and ownership structure before relying on the exemption.

What does this mean for Shopee, Lazada and TikTok Shop sellers?

LHDN’s updated FAQ specifically addresses sales through local e-commerce platforms.

Even when an MSME qualifies for the exemption, it must still provide the information requested by the platform for e-Invoice purposes. LHDN states that the responsibility for issuing the e-Invoice or self-billed e-Invoice for transactions conducted on a local e-commerce platform rests with the platform provider.

In practical terms:

  • An eligible seller may be exempt from issuing its own e-Invoice
  • The marketplace may still request the seller’s TIN, identification or business information
  • Sellers should ensure that their SSM, TIN, bank-account and platform details are accurate and consistent
  • Sellers should not ignore requests from Shopee, Lazada, TikTok Shop or another marketplace merely because their revenue is below RM3 million

The individual platforms may issue their own operational instructions, so sellers should continue checking their Seller Centre announcements.

What if the business has already started issuing e-Invoices?

The updated FAQ explains that an eligible taxpayer who now qualifies for the exemption does not need to submit a separate application or obtain prior approval from LHDN.

Such a taxpayer may discontinue issuing e-Invoices immediately or continue voluntarily.

Before stopping, the business should confirm that it meets every exemption condition—not only the revenue threshold. It should also preserve its invoices, receipts, marketplace statements and accounting records.

What happens after revenue reaches RM3 million?

For qualifying MSMEs that reach or exceed RM3 million from the year of assessment 2026 onwards, implementation generally begins on 1 January of the second year following the year of assessment in which the threshold was reached.

For example, LHDN’s FAQ shows that a qualifying business reaching RM3 million during YA2026 would begin e-Invoice implementation on 1 January 2028.

Different treatment may apply to businesses that crossed the threshold in earlier years or do not meet the exemption conditions.

Once a mandatory implementation year has been determined, a later reduction in revenue below RM3 million does not restore the exemption.

What should online sellers do now?

1. Confirm the correct revenue figure

Use the relevant audited financial statements or tax return. Sole proprietors with multiple registered businesses must generally consider the combined annual turnover or revenue of those businesses.

2. Check the ownership structure

Identify corporate shareholders, holding companies, related companies and joint ventures. A business below RM3 million may still be required to implement e-Invoice because of these relationships.

3. Update marketplace information

Check the TIN, SSM registration number, legal name, identity details, bank account and contact information recorded in each Seller Centre.

4. Keep platform transaction records

Download and retain order reports, commission statements, refunds, shipping charges and other marketplace records. These may be needed for accounting and tax reconciliation.

5. Separate marketplace and direct sales

Orders completed through a local marketplace and sales accepted directly through WhatsApp, a website, physical store or bank transfer may not follow exactly the same e-Invoice process. Record each sales channel clearly.

6. Obtain professional advice when necessary

Businesses with corporate shareholders, multiple entities, overseas suppliers or complicated ownership arrangements should confirm their position with a qualified accountant or tax adviser.

The key message

The RM3 million exemption reduces the immediate e-Invoice burden for many Malaysian online sellers, but it does not remove every responsibility.

Exempt sellers may still need to provide accurate information to e-commerce platforms, maintain proper transaction records and monitor when their annual revenue reaches the threshold.

Kitarpack will continue monitoring LHDN guidance and marketplace announcements affecting Malaysian online businesses.

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This article provides general business information and does not constitute tax, accounting or legal advice.