The e-Invoice threshold moves to RM3 million: do you still have to issue?

Hook

This one jumps the queue, because it took effect yesterday. The exemption threshold for e-Invoicing has moved from one million ringgit to three million. From 1 September, a business with annual revenue below RM3 million does not have to issue e-Invoices — and that includes self-billed invoices. More than 1.1 million businesses across the country have just moved out of scope. But there are two places where people get the arithmetic wrong.

The first trap: the wrong year

There are two tests here. They use almost the same words and they have different answers. Test one: am I exempt? That looks at your most recently completed financial year. If you have audited accounts, take the revenue in those accounts; if you do not, take the income you declared in that year's tax return. This test moves with you, year after year. Test two: if I am in scope, when do I start? That is the one anchored to your 2022 accounts. Most people go wrong by taking the 2022 figure and using it to claim the exemption. That is the answer to the other question. For the exemption, look at your latest completed year.

Sole proprietors add everything up

Every business registered in your personal name is added together. Three businesses at RM1.1 million each are not three exempt businesses. They are RM3.3 million, and that is over the line. It is not assessed business by business; it is the total under one person's name.

The second trap: a small company inside a group

A small company that belongs to a group is not exempt, however small it is on its own. Three situations, and any one of them is enough. One: your shareholder is another company with revenue of RM3 million or more. Two: you are a subsidiary of a holding company at RM3 million or above. Three: you have a related or associated company at RM3 million or above. The clearest example is a subsidiary turning over four hundred thousand whose parent has been issuing e-Invoices for a year already — that subsidiary is not exempt, and its own start date has already passed. If there is a parent or a related company anywhere in the picture, the test is the group, not you.

Exempt, and four things still apply

One. Your suppliers will still issue e-Invoices to you. What you are exempt from is issuing, not receiving. Give every supplier your TIN, your registered name, your address and your SST number; without them they will roll you into a consolidated monthly invoice and your evidence trail for the deduction breaks. Two. Your existing invoices and receipts remain valid — a customer cannot self-bill simply because you did not issue. Three. Your bookkeeping obligations are untouched: the Income Tax Act still applies and records are still kept for seven years. Four. Keep MyTax and your TIN alive; you need them to receive, and you will need them the day you cross the line. One more, for anyone already issuing: the RM1m to RM3m band is now exempt, so carry on but stop worrying about it. And remember the exemption runs from 1 September — it does not run backwards. Whatever you owed for the months before that, you still owe.

To close

Cross the line and you do not start the next morning. Take the year of assessment in which your revenue first exceeds RM3 million; you start on 1 January of the second year after it. That whole year in between is there for you to prepare in, not to rush in. One thing that should settle the nerves: RM3 million is the same figure the audit exemption uses for a private limited company, so the two are aligned and we do not expect this number to move again soon. Do one thing this month — find the revenue figure for your most recently completed year. That single number decides everything above.