Following the Prime Minister’s announcement this morning, the Inland Revenue Board has announced the extension to the transition period for Phase 4 e-Invoicing, which officially commenced on January 1, 2026, doubling the “soft launch” grace period from six months to 12 months.
Under the new directive, taxpayers under Phase 4—primarily those with annual revenues between RM1 million and RM5 million—will have until December 31, 2026, to fully comply with the digital mandate without facing penalties.
To ensure a frictionless migration, IRB has authorised three major relaxations for businesses during this one-year window:
Businesses can issue a single consolidated e-invoice for all transactions and activities, including those previously restricted under Section 3.7 of the Specific e-Invoicing Guidelines. Crucially, this applies even if a buyer requests an individual e-invoice.
The relaxation extends to self-billed scenarios, allowing businesses to group these transactions as outlined in Section 8.3 of the guidelines.
Taxpayers are permitted to enter any transaction description in the “Product or Service Description” field, easing the administrative burden of precise data entry during the early stages.
Special Relief for the Construction Material Sector
In a move to support the heavy-volume nature of the building industry, the government has also introduced a specific relaxation for wholesalers and retailers of construction materials.
Effective January 1, 2026, these businesses are permitted to issue consolidated e-invoices for their sales. Under this special provision:
- Threshold: Individual e-invoices are only mandatory for transactions exceeding RM10,000.
- Buyer Requests: An individual e-invoice must still be issued if specifically requested by the buyer for transactions below the threshold.
This move is designed to prevent building material traders from being overwhelmed by the requirement to generate a unique digital invoice for every minor transaction.
IRB emphasised that no penalties will be imposed for non-compliance with e-invoicing requirements during these 12 months, provided that businesses adhere to the consolidated invoicing rules mentioned above.
“The 12-month extension provides MSMEs with the necessary ‘breathing space’ to stabilize their digital systems while ensuring that the building material sector remains efficient and unburdened by excessive paperwork,” IRB stated in their release.
