- The Phase 4 e-invoice grace period has been extended by 12 months: it now ends 31 December 2027 (previously 31 December 2026). [LHDN e-Invoice General FAQs, FAQ 104, updated April 2026]
- Full penalty enforcement for Phase 4 businesses now begins 1 January 2028 (previously 1 January 2027). [The Star, 21 Apr 2026; Business Today, 20 Apr 2026]
- Affected businesses: annual revenue RM1M–RM5M (FY2022 basis) and new businesses (commenced 2023–2025) with current revenue above RM1M.
- Phases 1, 2, and 3 (above RM5M revenue) are not affected by this extension. Active enforcement for those phases continues unchanged.
- The RM10,000 rule still applies during the grace period: any single transaction at or above RM10,000 requires an individual e-invoice immediately. [e-Invoice Specific Guideline v4.6, Table 3.6]
- The extension was announced by Prime Minister Datuk Seri Anwar Ibrahim as part of a broader SME relief package in April 2026.
Phase 4 e-Invoice Deadline Extended to January 2028
Malaysia’s government has extended the Phase 4 e-invoice grace period by a further 12 months. Lembaga Hasil Dalam Negeri (Inland Revenue Board of Malaysia, LHDN) and the Prime Minister’s office confirmed that businesses with annual revenue between RM1 million and RM5 million now have until 31 December 2027 before penalties apply, pushing the enforcement start date to 1 January 2028. The mandatory implementation date of 1 January 2026 has not changed: Phase 4 businesses must still issue e-invoices through MyInvois (LHDN’s e-invoice validation portal). For a full breakdown of how the Malaysian e-invoice system works, see our complete LHDN e-invoice guide for 2026. What changed is when LHDN will begin imposing penalties for non-compliance.
What Changed: The Phase 4 Grace Period Extended to 31 December 2027
On 20 April 2026, Prime Minister Datuk Seri Anwar Ibrahim announced a further 12-month extension to the Phase 4 e-invoice implementation timeline. Reported by Business Today on 20 April 2026 and The Star on 21 April 2026, the extension gives mid-size businesses more time to implement compliant e-invoicing systems before penalties take effect.
The government cited SME readiness challenges as a key reason. The announcement was part of a wider economic support package, which also included a RM5 billion financing guarantee through the Syarikat Jaminan Pembiayaan Perniagaan (SJPP) with 80% coverage and extended 10-year guarantee periods, alongside interim exemptions on import duties and sales tax for re-imported Malaysian goods.
LHDN subsequently updated its e-Invoice General FAQs document. The extension is captured in FAQ 104 of the April 2026 updated version of the LHDN FAQ PDF, available at hasil.gov.my.
Before and After: Phase 4 Dates at a Glance
| Item | Before (Jan 2026 announcement) | After (Apr 2026 announcement) |
|---|---|---|
| Mandatory implementation start | 1 January 2026 | 1 January 2026 (unchanged) |
| Grace period (relaxation) ends | 31 December 2026 | 31 December 2027 |
| Penalty enforcement begins | 1 January 2027 | 1 January 2028 |
| Consolidated e-invoices permitted | Yes, during grace period | Yes, during extended grace period |
| RM10,000 rule | Enforced from 1 Jan 2026 | Enforced from 1 Jan 2026 (unchanged) |
Source: LHDN e-Invoice General FAQs (updated April 2026), FAQ 104; The Star, 21 Apr 2026; Business Today, 20 Apr 2026
What Did NOT Change (Read This Carefully)
The extension applies only to the grace period for Phase 4 businesses. A number of other rules remain exactly as before. Misreading the scope of this extension could create real compliance risk.
Mandatory start date is unchanged. Phase 4 businesses must still issue LHDN-validated e-invoices from 1 January 2026 onward. The extension does not grant permission to delay e-invoice issuance: it only delays penalties for those still working toward full compliance. [e-Invoice Specific Guideline v4.6, Section 2.0, 5 Jan 2026, available at myinvois.hasil.gov.my]
Phases 1, 2, and 3 are not affected. Enforcement is already active for businesses above RM5M annual revenue. If your company falls in Phase 1 (above RM100M), Phase 2 (RM25M–RM100M), or Phase 3 (RM5M–RM25M), nothing has changed for you. Full penalties apply now.
The RM10,000 rule remains strictly enforced. Any single transaction at or above RM10,000 cannot be consolidated. It must be issued as an individual e-invoice immediately, regardless of the grace period. This applies to all businesses in Phase 4 from 1 January 2026. See our full guide to the RM10,000 e-invoice rule in Malaysia for a breakdown of which transaction types this applies to. [e-Invoice Specific Guideline v4.6, Table 3.6]
Penalty structure is unchanged. When enforcement begins on 1 January 2028, the same penalties apply: RM200–RM20,000 per invoice for failure to issue a compliant e-invoice, plus up to 6 months’ imprisonment. For the full penalty breakdown and how LHDN calculates fines, read our e-invoice penalty guide for Malaysian SMEs. [Income Tax Act 1967, S.82C(1), Para 120(1)(d)]
The Phase 5 exemption (below RM1M) is unchanged. Businesses with annual revenue below RM1M remain exempt, subject to the MSME exemption caveats. Subsidiaries and related companies of a RM1M+ business are not exempt even if their own revenue falls below RM1M. For a full breakdown of eligibility, see our guide to the MSME e-invoice exemption in Malaysia. [LHDN e-Invoice General FAQs (5 Jan 2026), Q89–Q94]
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Which Businesses Are Affected by the April 2026 Extension
Established businesses (FY2022 revenue basis)
Businesses operating before 2023 are assigned to phases based on their FY2022 audited financial statements (or tax return if no audit).
| Phase | Revenue Threshold (FY2022) | Mandatory Start | Relaxation Ends | Enforcement |
|---|---|---|---|---|
| Phase 1 | Above RM100M | 1 Aug 2024 | 31 Jan 2025 | Active now |
| Phase 2 | RM25M–RM100M | 1 Jan 2025 | 30 Jun 2025 | Active now |
| Phase 3 | RM5M–RM25M | 1 Jul 2025 | 31 Dec 2025 | Active now |
| Phase 4 | RM1M–RM5M | 1 Jan 2026 | 31 Dec 2027 | 1 Jan 2028 |
| Phase 5 | Below RM1M | Exempt | N/A | N/A |
Source: e-Invoice Specific Guideline v4.6, Section 2.0 (5 Jan 2026); LHDN e-Invoice General FAQs (updated April 2026), FAQ 104
New businesses (commenced 2023–2025)
Businesses that started operations in 2023, 2024, or 2025 have no FY2022 financial data and are assessed on their current revenue.
| Current Revenue | Mandatory Start | Relaxation Ends | Enforcement |
|---|---|---|---|
| RM1M or above | 1 Jul 2026 | 31 Dec 2027 | 1 Jan 2028 |
| Below RM1M | Exempt (Phase 5 rules apply) | N/A | N/A |
The April 2026 extension aligns the grace period for new businesses with the Phase 4 established business timeline. [LHDN e-Invoice General FAQs (updated April 2026), FAQ 104]
What the Grace Period Allows (and What It Does Not)
A grace period (also called the relaxation period) is the window during which LHDN will not impose penalties even though the legal obligation to issue e-invoices is already in force. Understanding its scope prevents businesses from interpreting it as permission to do nothing.
What the grace period allows:
- Issuing consolidated e-invoices for most transactions. A consolidated e-invoice is a single monthly summary document that combines multiple individual transactions into one LHDN-validated submission, instead of issuing a separate e-invoice per transaction. Consolidated e-invoices must be submitted to MyInvois within 7 calendar days after the end of each month. For step-by-step instructions, see our guide on how to issue consolidated e-invoices in Malaysia. [e-Invoice Specific Guideline v4.6, Section 3.6]
- Using general product or service descriptions in consolidated e-invoices rather than full line-item detail.
- Buyers may still request individual e-invoices during the grace period, and suppliers must comply when asked.
What the grace period does not allow:
- Delaying e-invoice issuance entirely. You must still issue LHDN-validated e-invoices.
- Consolidating any single transaction at or above RM10,000. Individual e-invoice required immediately.
- Assuming no enforcement action is possible. LHDN retains the right to investigate, audit, and in egregious cases act even during the relaxation period.
Voluntary adoption is strongly advisable. Businesses that implement full e-invoicing compliance during the grace period benefit from a longer testing window, better data quality in their MyInvois records, and reduced risk exposure. The extension provides time, not immunity.
Why Did the Government Extend Phase 4 Again?
This is the second extension to the Phase 4 grace period. The first was announced in January 2026 (extending enforcement from July 2026 to January 2027); see our earlier article on the Phase 4 e-invoice deadline extension for SMEs for that timeline. The April 2026 announcement adds another full year.
The government framed this as part of a broader effort to support businesses amid economic pressures and ongoing supply chain uncertainty. The government confirmed that implementation readiness across mid-size businesses remains lower than anticipated, and that a further 12-month window would allow more businesses to integrate properly without facing penalties during a transition that remains technically complex for many.
This pattern of extension, while welcome for businesses that are behind, also signals that LHDN is watching. The February 2026 announcement that LHDN had identified over 500,000 non-compliant cases across all phases and RM1.4 billion in unreported income [LHDN media release, Feb 3, 2026] makes clear that enforcement appetite is high. The grace period is a tool for readiness, not a signal that enforcement will be soft when it arrives.
What Should Phase 4 SMEs Do Right Now?
The best response to this extension depends on where your business currently stands.
If you have already started implementing e-invoicing
Continue. Do not use the extension as a reason to slow down or pause. Businesses that have already integrated with MyInvois, trained their teams, and are issuing e-invoices are in the strongest possible position. Every month of additional data in your MyInvois records builds a cleaner audit trail.
Review whether your current setup handles the RM10,000 rule correctly. This is the area where most Phase 4 businesses are at risk during the grace period: consolidated invoices that should have been individual.
If you have not yet started
Use this extension to implement properly, not to defer the decision. A 12-month extension sounds like a long time. But for a business with existing ERP or accounting software, integration, testing, user training, and operational rollout realistically takes 3–6 months. Starting in mid-2027 leaves almost no margin.
Here is a practical preparation sequence:
- Confirm your revenue threshold. Pull your FY2022 audited financial statements and confirm your Phase 4 status. If you are a new business that commenced in 2023–2025, check whether your current revenue has crossed RM1M.
- Identify your existing systems. Document what accounting, ERP, or POS systems you currently use. Your e-invoice solution must integrate with these, not replace them.
- Choose your submission approach. Three options exist: the MyInvois portal (manual, suitable for very low volume), direct API integration (technical, requires developer resources), or middleware (connects your existing systems to MyInvois without custom development). If you are unsure how these differ in practice during the grace period, see our breakdown of e-invoice implementation with and without a grace period.
- Map your RM10,000 transactions. Immediately identify any recurring transaction types that exceed RM10,000. These must be issued as individual e-invoices now. They cannot wait until January 2028.
- Set a go-live target of Q1 2027 at the latest. This gives a full year of live operation before enforcement begins, with time to resolve integration issues.
How JomeInvoice Helps Phase 4 SMEs Get Compliant
JomeInvoice is a middleware platform built specifically for LHDN MyInvois compliance. It connects your existing accounting, ERP, or POS system to MyInvois without requiring custom development or system replacement. For a detailed look at how the integration works, see our guide to MyInvois integration via JomeInvoice.
For Phase 4 SMEs, JomeInvoice handles the compliance workflow from your existing system: e-invoice generation, real-time LHDN validation, 72-hour cancellation management, consolidated e-invoice batching (within the 7-day deadline), and RM10,000 rule enforcement so high-value transactions are never accidentally consolidated.
Key certifications relevant to Phase 4 businesses: ISO 9001 (quality management), ISO 27001 (data security), PDPA compliance, and MySTI certified, meaning JomeInvoice is on LHDN’s approved list of middleware providers.
The extended grace period to December 2027 gives Phase 4 businesses time to implement properly, test thoroughly, and go live with confidence. JomeInvoice onboarding for SMEs typically takes days, not months, meaning the time available for the operational transition is substantial.
For businesses already running accounting software (SQL, AutoCount, Xero, QuickBooks, or others), JomeInvoice integrates without replacing your existing workflow.
Ready to use the extension wisely? Visit sme.jomeinvoice.my to explore the SME plan, or book a free demo to see how JomeInvoice connects to your specific system.
Recommended Next Steps
- Confirm your phase status using your FY2022 audited financials or tax return.
- Identify any existing transactions at or above RM10,000: these must be issued as individual e-invoices now, regardless of the extension.
- Map your existing accounting or ERP systems to understand your integration requirements.
- Set an internal go-live target of Q1 2027 to allow a full year of live operation before enforcement.
- Contact a qualified tax advisor if you are unsure of your phase assignment, especially for new businesses or group structures. Review the LHDN e-invoice compliance review framework to understand what LHDN checks during an audit and how to prepare your records accordingly.
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Disclaimer: This article is for general informational purposes only and does not constitute legal or tax advice. LHDN guidelines are subject to updates. Always refer to the latest official LHDN e-Invoice Guidelines at myinvois.hasil.gov.my and consult a qualified tax professional for advice specific to your business.
Frequently Asked Questions
What is the new enforcement date for Phase 4 e-invoice in Malaysia?
The new penalty enforcement date for Phase 4 businesses (RM1M–RM5M annual revenue, FY2022 basis) is 1 January 2028. The grace period ends on 31 December 2027. This was announced by Prime Minister Datuk Seri Anwar Ibrahim in April 2026 and reflected in LHDN e-Invoice General FAQs (FAQ 104, updated April 2026).
Does the Phase 4 extension mean I don’t need to issue e-invoices until 2028?
No. The mandatory implementation date of 1 January 2026 has not changed. Phase 4 businesses must still issue LHDN-validated e-invoices from that date. The extension only delays when LHDN will impose penalties: it does not delay the legal obligation to issue e-invoices. [e-Invoice Specific Guideline v4.6, Section 2.0]
Do I still have to follow the RM10,000 rule during the grace period?
Yes. Any single transaction at or above RM10,000 must be issued as an individual e-invoice immediately, even during the extended grace period. This rule cannot be consolidated and is strictly enforced from 1 January 2026. [e-Invoice Specific Guideline v4.6, Table 3.6]
Which phases are affected by the April 2026 extension?
Only Phase 4 (RM1M–RM5M annual revenue, FY2022 basis) and new businesses (commenced 2023–2025) with current revenue at or above RM1M. Phases 1, 2, and 3 are not affected. Enforcement is already active for businesses above RM5M in annual revenue.
Can I still use consolidated e-invoices during the extended grace period?
Yes. Consolidated e-invoices remain permitted during the extended grace period through 31 December 2027. The consolidated e-invoice must be submitted to MyInvois within 7 calendar days after month-end. Buyers may still request individual e-invoices at any time and suppliers must comply. [e-Invoice Specific Guideline v4.6, Section 3.6]
Why did the government extend Phase 4 again?
The government cited readiness challenges across mid-size businesses and framed the extension as part of a broader SME support package in April 2026. This is the second Phase 4 extension: the first, in January 2026, moved enforcement from July 2026 to January 2027. [The Star, 21 Apr 2026; Business Today, 20 Apr 2026]
Is the Phase 5 exemption (below RM1M) affected?
No. Businesses with annual revenue below RM1M remain exempt from the e-invoice mandate, subject to the standard MSME exemption caveats. Subsidiaries and related companies of a RM1M+ business do not qualify even if their own revenue is below RM1M. [LHDN e-Invoice General FAQs (5 Jan 2026), Q89-Q94]
When should Phase 4 businesses realistically start implementing?
Now, or at the latest by Q1 2027. Integration, testing, and team training typically takes 3-6 months depending on your existing systems. Waiting until mid-2027 leaves almost no operational margin before the 1 January 2028 enforcement date. Businesses that start now get a full real-world testing period before penalties apply.
Last updated: 22 April 2026 | Written by Yinn Sheng Ng, Senior Manager
