As of November 8, 2024, Malaysia’s Inland Revenue Board (LHDN) has maintained the e-invoicing implementation threshold at RM150,000 in annual revenue. Businesses with revenue below this threshold are generally exempt from mandatory e-invoicing. However, specific conditions may require these smaller businesses to adopt e-invoicing Malaysia:
1. e-invoicing Malaysia for Corporate Shareholder Involvement
Companies with corporate shareholders face different e-invoicing requirements. If a business with revenue below RM150,000 has corporate shareholders and those shareholders have annual revenue exceeding RM150,000, the company must implement e-invoicing.
Example:
- Oyen SB has a revenue of RM500,000 and owns a 20% share in HaHeng Cafe SB, a cafe generating RM50,000 annually. Despite HaHeng Cafe SB’s revenue being below the RM150,000 threshold, the involvement of a corporate shareholder with substantial revenue makes e-invoicing mandatory for the cafe.
This requirement ensures that businesses connected to larger corporate entities maintain transparency and consistency in invoicing practices.
2. e-invoicing Malaysia for Subsidiary of a Higher Revenue Parent Company
Subsidiaries of larger companies are also required to implement e-invoicing if their parent company’s revenue is above RM150,000. Even if the subsidiary itself generates less than RM150,000, it must comply with the e-invoicing regulation.
Example:
- Ong Ah SB, a company with an annual revenue of RM888,000, holds a 51% stake in Huat Ah Kuih SB, a bakery generating RM88,000. Since the parent company’s revenue exceeds the threshold, the subsidiary is obligated to implement e-invoicing.
This provision aims to prevent revenue fragmentation across related entities, ensuring accurate reporting of financial activities within a corporate group.
3. Related or Joint Venture Companies
e-invoicing is also mandatory for companies within related or joint venture (JV) structures. If a related company’s revenue exceeds RM150,000, even companies with lower revenue in the structure must adopt e-invoicing.
Example:
- Fam Fesh SB, a company generating RM50 million in revenue, has a related company, Chajee SB, with RM50,000 in revenue. Despite Chajee SB’s revenue being under RM150,000, it must issue e-invoices due to its connection with Fam Fesh SB.
This rule addresses the need for comprehensive financial visibility among companies with shared ownership or close financial relationships.
4. Sole Proprietorship with Multiple Businesses
For sole proprietorships managing multiple business ventures, the combined revenue of all businesses is considered when evaluating the RM150,000 threshold. If the total revenue from all businesses exceeds RM150,000, each business under the sole proprietor is required to issue e-invoices.
Example:
- A sole proprietor operates three businesses: Ga Taomo Barber (RM50,000), Zo Binpao Bakery (RM35,000), and Pao Kopi Cafe (RM70,000). Together, these businesses generate RM155,000, surpassing the RM150,000 threshold, and therefore must all implement e-invoicing.
This requirement encourages accurate revenue reporting across all business activities of a single proprietor.
5. e-invoicing Exemptions for Businesses
While LHDN e-invoice guidelines make e-invoicing mandatory under the conditions above, companies with revenue under RM150,000 and none of these affiliations or connections are exempted from e-invoicing requirements. Additionally, sole proprietorships with total revenue below RM150,000 across all businesses are also exempt.
When Small Business Need to Start e-invoicing Malaysia
If a business meets any of the conditions listed above, they must begin implementing e-invoicing according to LHDN’s phased plan. Companies exceeding RM150,000 should prepare by understanding the technical and operational steps involved in transitioning to an e-invoice system. More guidance on the implementation timeline will follow from LHDN, helping businesses align with Malaysia’s move toward a digitalized invoicing ecosystem.
Are You Ready for e-invoicing? Hidden Triggers for Small Businesses with Revenue Below RM150,000
The latest LHDN e-invoice updates emphasize that e-invoicing Malaysia is not solely for high-revenue companies. Businesses with revenue below RM150,000 but affiliated with larger entities or part of certain ownership structures must adopt e-invoicing. This regulation enhances tax compliance and provides LHDN with a clearer view of interconnected financial activities. For companies unsure of their e-invoicing Malaysia obligations, consulting a tax advisor or reviewing the official LHDN guidelines can provide clarity and help ensure compliance.
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JomeInvoice Top 3 e-invoicing Software Malaysia
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Contact JomeInvoice Sdn Bhd:
- Address:
Level 38, MYEG Tower, Empire City Damansara, Jalan PJU 8, Damansara Perdana, 47820 Petaling Jaya, Selangor
D-04-07, Plaza Bukit Jalil (Aurora Place), No. 1, Persiaran Jalil 1, Bandar Bukit Jalil, 57000 Kuala Lumpur - Phone: +6016-732 0163
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