Expansion of Exemptions for SMEs from Mandatory E-Invoicing
PETALING JAYA: A significant change has been made to the e-invoicing policy in Malaysia, with approximately 200,000 more small and medium-sized enterprises (SMEs) now exempted from the mandatory requirement. This adjustment is due to an increase in the annual revenue threshold to RM1 million, as announced by a trade group.
The Small and Medium Enterprises Association of Malaysia (Samenta) expressed its approval of the government’s decision, calling it timely and considerate given the challenges that SMEs are currently facing.
William Ng, president of Samenta, highlighted that many of these 200,000 SMEs operate with narrow profit margins and lack the necessary digital infrastructure to implement e-invoicing immediately. He emphasized that this announcement provides much-needed relief during a period when these businesses are already dealing with rising costs, uncertain tariffs, competition from foreign online sellers, and other unexpected compliance issues.
“This decision allows the smallest enterprises in Malaysia to concentrate on stabilizing their operations, enhancing productivity, and improving internal processes without the fear of sudden disruptions,” said Ng in a statement. He further noted that this move also supports the broader national digitalization agenda by ensuring that adoption occurs at a practical, sustainable, and realistic pace.
Despite the exemption, Ng reminded SMEs that they should not delay their efforts towards automation and digitalization. He encouraged business owners to use this additional time to strengthen their accounting practices and financial records while gradually transitioning to digital systems.
Samenta commended the prime minister and the finance ministry for addressing the concerns of the SME community and taking a balanced approach that protects both economic resilience and long-term national progress.
Key Details of the Policy Change
- Exemption Threshold: Businesses with annual revenue under RM1 million will be exempt from mandatory e-invoicing.
- Implementation Date: The new policy will come into effect on January 1.
- Previous Timeline: In June, the Inland Revenue Board announced that the implementation of e-invoicing for companies earning between RM1 million and RM5 million would be postponed to January 1, 2026, from July 1, 2025.
- Previously Proposed Timeline: Implementation for companies with annual revenue of up to RM1 million was initially planned to be deferred to July 1, 2026.
This policy change reflects a more flexible approach to digital transformation, allowing SMEs to adapt at their own pace while still contributing to the country’s digitalization goals. It also acknowledges the diverse needs and capabilities of different businesses within the SME sector.