- 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 exceeding RM10,000 requires an individual e-invoice immediately, for all businesses in every phase. [e-Invoice Specific Guideline v4.8 (7 Jul 2026), Table 3.6]
- New in July 2026: the e-Invoice Special Voluntary Disclosure Programme (SVDP) lets businesses back-file missed or erroneous e-invoices with no penalties and no prosecution, from 7 July 2026 to 31 December 2027. [e-Invoice Specific Guideline v4.8, Section 17]
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. The consolidated relaxation timeline now appears in Table 16.1 of the e-Invoice Specific Guideline v4.8 (7 Jul 2026).
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; e-Invoice Specific Guideline v4.8 (7 Jul 2026), Table 16.1; 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 v4.8 (7 Jul 2026), Section 2.0, 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 exceeding 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 every phase 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 v4.8, Table 3.6]
Penalty structure is unchanged. When enforcement begins on 1 January 2028, the same penalties apply: a fine of RM200–RM20,000 per invoice for failure to issue a compliant e-invoice, or up to 6 months’ imprisonment, or both. 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 v4.8 (7 Jul 2026), Section 2.0 and Table 16.1; 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. Guideline v4.8 groups both populations under “taxpayers with annual turnover or revenue of up to RM5 million” in Table 16.1. [e-Invoice Specific Guideline v4.8, Table 16.1; 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 v4.8, Sections 3.6 and 16.2]
- Using general product or service descriptions in consolidated e-invoices rather than full line-item detail.
- Buyers may still request individual e-invoices, but a supplier following the relaxed conditions may decline the request during the relaxation period and continue issuing consolidated e-invoices. Outside the relaxation, buyer requests made within the transaction month must be honoured. [e-Invoice Specific Guideline v4.8, S.16.2(d)]
What the grace period does not allow:
- Delaying e-invoice issuance entirely. You must still issue LHDN-validated e-invoices.
- Consolidating any single transaction exceeding 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.
Missed E-Invoices Since January 2026? The SVDP Amnesty Is Open Until 31 December 2027
The e-Invoice Special Voluntary Disclosure Programme (SVDP) is an amnesty introduced in Section 17 of the e-Invoice Specific Guideline v4.8 (7 July 2026). It runs from 7 July 2026 to 31 December 2027, matching the end of the Phase 4 grace period. For Phase 4 businesses that fell behind after the 1 January 2026 mandatory start, this is the clean-up window.
What the SVDP offers: businesses that voluntarily back-file missed, erroneous, or never-submitted e-invoices under the programme face no compliance review, no penalties, and no prosecution on the disclosed e-invoices. [e-Invoice Specific Guideline v4.8, S.17.3]
Who qualifies: taxpayers who missed submissions since their mandatory date, submitted non-compliant or erroneous e-invoices, never submitted anything, or are already under (or notified of) an e-invoice compliance review. [S.17.1]
The conditions that still bind:
- Back-filing is one consolidated e-invoice per month of transaction. A lump-sum consolidated e-invoice across multiple months is not allowed. [S.17.6, Example 23]
- The RM10,000 rule still applies: back-filed single transactions above RM10,000 need individual e-invoices, and only the remainder may be consolidated. [Example 24]
- SVDP submissions must use the dedicated version tag
SVDP 1.2(no digital signature) orSVDP 1.3(with digital signature), and these tags must not be used for normal submissions. [S.17.5] - Relief does not apply if the SVDP submissions themselves fail the prescribed specifications, or where fraud, wilful default, or negligence is involved. [S.17.4]
For a Phase 4 SME that has been issuing paper or PDF invoices since January 2026 while “waiting to see”, the practical path is now clear: back-file the gap months under the SVDP, then go live on a compliant system well before 1 January 2028.
Why Did the Government Extend Phase 4 Again?
This is the second extension to the Phase 4 grace period. The first, announced in January 2026, extended enforcement from July 2026 to January 2027 and doubled the original six-month grace period to twelve. The April 2026 announcement adds another full year on top.
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.
Will the Government Cancel e-Invoicing Altogether?
Some business owners are hoping that, after two extensions, the government will eventually reverse the e-invoicing mandate entirely. That expectation is unrealistic, for four reasons.
First, LHDN has invested heavily in the MyInvois infrastructure, and the system has been validating invoices in production since August 2024. Governments rarely abandon operational infrastructure of this scale.
Second, Malaysia’s e-invoicing mandate aligns with international tax digitalisation standards. Reversing course would damage Malaysia’s credibility in global tax cooperation frameworks.
Third, Phases 1, 2, and 3 are fully operational, with thousands of larger enterprises already issuing validated e-invoices daily. Reversing the mandate now would create administrative chaos for every business that is already compliant.
Fourth, the track record is consistent: Phase 1 launched in August 2024, Phase 2 in January 2025, and Phase 3 in July 2025, all as planned. Grace periods have been extended, but no phase has ever been cancelled, and enforcement for Phases 1–3 is active today.
The pattern is clear: timelines may flex, but the mandate does not. Planning on cancellation is not a strategy.
Why Waiting Until Late 2027 Is Risky
The extended grace period provides breathing room, but treating 31 December 2027 as the date to start (rather than the date to be finished) creates several concrete risks.
Vendor capacity bottlenecks
E-invoicing implementation moves fastest when vendor capacity is freely available. If a large share of Phase 4 businesses waits until the second half of 2027, vendor capacity will be squeezed. In earlier phases, late movers faced longer implementation queues and premium pricing for rush work.
Limited staff training time
Finance and operations teams need time to adapt to new workflows. The first 30–60 days involve learning curves, workflow adjustments, and troubleshooting edge cases. Implementing during 2026 or early 2027 gives your team many months to stabilise processes in a no-penalty environment; starting in Q4 2027 compresses that into weeks.
System integration complexity
Most SMEs run existing accounting software (AutoCount, SQL, Xero, QuickBooks) or POS systems that need to connect to MyInvois. Discovering an integration issue in November 2027 leaves no buffer before enforcement begins on 1 January 2028.
Audit-trail exposure
Every month you rely on consolidated e-invoices under the relaxation is a month of thinner transaction-level records. Businesses that move to full compliance early build a cleaner MyInvois audit trail, which matters given LHDN’s publicly stated enforcement appetite.
Choosing Your Implementation Approach
Phase 4 businesses have three primary routes to compliance. The right one depends on your systems and in-house capability, and the difference matters more during the grace period than most owners realise. For a deeper comparison of how implementation differs with and without the relaxation, see our breakdown of e-invoice implementation with and without a grace period.
Option 1: MyInvois portal or direct API integration
Submitting manually through the MyInvois portal, or connecting your systems directly to LHDN’s API. The portal suits very low invoice volumes; direct API integration requires in-house IT expertise and ongoing maintenance as LHDN’s technical specifications evolve.
Best for: very small invoice volumes (portal) or SMEs with dedicated IT teams and custom-built systems (API).
Option 2: Full accounting software replacement
Switching to an accounting platform with built-in e-invoicing. This achieves compliance but involves data migration, change management, and staff retraining on an entirely new system.
Best for: businesses that were planning a complete finance-system overhaul anyway.
Option 3: Middleware
Specialised e-invoicing middleware connects your existing ERP, POS, e-commerce, or accounting software to MyInvois without replacing anything. Your team keeps its current workflow; the middleware handles validation, submission, and compliance rules in the background.
Best for: most Phase 4 SMEs seeking fast, low-disruption implementation. Learn more about e-invoicing for SMEs.
Your Quarter-by-Quarter Plan to 1 January 2028
The best response to this extension depends on where your business stands today. Whichever group you are in, the deadline logic is the same: implementation, testing, and training realistically take 3–6 months, so the safe final go-live target is Q1 2027, close to a full year before enforcement.
If you have already started implementing e-invoicing
Continue. Do not use the extension as a reason to slow down or pause. Businesses already integrated with MyInvois, with trained teams issuing e-invoices, are in the strongest position: every month of additional data in your MyInvois records builds a cleaner audit trail.
One check to run now: confirm your setup handles the RM10,000 rule correctly. This is where most Phase 4 businesses are at risk during the grace period: transactions exceeding RM10,000 accidentally swept into consolidated invoices.
If you have not yet started: the dated sequence
Now – Q4 2026: scope and back-file.
Step 1: Confirm your phase status from FY2022 audited financials (or current revenue if you commenced 2023–2025).
Step 2: Map any transactions exceeding RM10,000: these must be issued as individual e-invoices immediately, extension or not.
Step 3: If you have missed submissions since 1 January 2026, back-file them under the SVDP amnesty (open until 31 December 2027) to clear the slate penalty-free.
Step 4: Document your existing accounting, ERP, or POS systems and shortlist compatible solutions. Your e-invoice route must integrate with these, not replace them.
Q1 2027: implement and go live.
Step 5: Choose your submission approach (portal, direct API, or middleware, per the comparison above) and schedule implementation during a low-activity period.
Step 6: Go live, and allocate 30–60 days for staff training and workflow stabilisation while penalties are still off.
Q2–Q4 2027: stabilise on live data.
Step 7: Run fully compliant for the remainder of 2027, resolving edge cases (returns, deposits, self-billed scenarios) in a no-penalty environment.
Step 8: Phase out reliance on consolidated e-invoices ahead of 1 January 2028, when the relaxation concessions end and normal rules resume in full. [e-Invoice Specific Guideline v4.8, Section 16.2]
1 January 2028: enforcement begins. Businesses still non-compliant face RM200–RM20,000 per invoice from day one.
Starting the sequence in mid-2027 leaves almost no margin. Starting now makes every step unhurried.
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 20000-1 (IT service management), ISO 27001 (data security), PDPA compliance, and MySTI certification under MOSTI’s programme for Malaysian-built technology, meaning JomeInvoice is a government-certified, locally developed platform.
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 exceeding RM10,000: these must be issued as individual e-invoices now, regardless of the extension.
- If you have missed submissions since January 2026, back-file them under the SVDP amnesty before 31 December 2027.
- Map your existing accounting or ERP systems and choose your implementation approach (portal, API, or middleware).
Step 5: Set an internal go-live target of Q1 2027 to allow a full year of live operation before enforcement.
Step 6: 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.
Get set up before January 2028.
Join hundreds of Malaysian SMEs already compliant on JomeInvoice.
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 v4.8, Section 2.0]
Do I still have to follow the RM10,000 rule during the grace period?
Yes. Any single transaction exceeding RM10,000 must be issued as an individual e-invoice immediately, even during the extended grace period. This rule applies to all businesses in every phase, cannot be consolidated, and is enforced from 1 January 2026. [e-Invoice Specific Guideline v4.8, 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. During the relaxation period, a supplier following the relaxed conditions may even decline a buyer’s request for an individual e-invoice. [e-Invoice Specific Guideline v4.8, Sections 3.6 and 16.2(d)]
What is the e-Invoice SVDP and who can use it?
An amnesty running 7 July 2026 to 31 December 2027. Businesses with missed, erroneous, or never-filed e-invoices can back-file one consolidated e-invoice per transaction month with no penalties, prosecution, or compliance review. Transactions above RM10,000 back-file individually. [e-Invoice Specific Guideline v4.8, Section 17]
Will the government cancel e-invoicing entirely?
No. Phases 1–3 are fully operational with active enforcement, MyInvois has validated invoices in production since August 2024, and every phase launched as scheduled. Grace periods have been extended twice, but the mandate has never been rolled back. Plan on 1 January 2028 as firm.
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, and risks the vendor capacity crunch that hit late movers in earlier phases.
Last updated: 19 August 2026 | Written by Yinn Sheng Ng, Head of Marketing