Malaysia’s decision to raise the e-Invoice exemption threshold to RM3 million will ease pressure on smaller businesses while allowing tax authorities to focus resources on larger taxpayers, according to two leading tax experts.
KPMG Malaysia Head of Tax Soh Lian Seng and Ernst & Young Consulting Sdn Bhd Malaysia Tax Managing Partner Farah Rosley told BusinessToday that the announcement by Prime Minister Datuk Seri Anwar Ibrahim late last month represents a pragmatic recalibration of Malaysia’s e-Invoicing rollout rather than a retreat from its digital tax agenda.
During his Merdeka address, Anwar announced that the annual sales threshold for businesses exempt from mandatory e-Invoicing would be raised from RM1 million to RM3 million.
For smaller firms still facing the costs and operational challenges of digitalisation, Soh said the higher threshold provides valuable breathing room.
“Anwar’s announcement on raising the e-invoicing threshold is a pragmatic and timely decision that reflects the government’s willingness to listen to feedback from businesses, particularly micro and small enterprises (MSMEs) that may require more time to prepare for digital transformation,” he said.
More Time To Get Digital Ready
Soh stressed that e-invoicing implementation extends well beyond installing new software.
“Businesses may need to digitise records, overhaul internal processes, train staff, engage customers and suppliers, and invest in suitable systems and controls.
“The revised threshold gives smaller companies more time to build that capability,” Soh said, while cautioning that exempted businesses should not treat the move as a reason to delay preparations.
“Businesses that are temporarily exempted should use this additional time to strengthen their systems and readiness,” he emphasised.
Meanwhile, Farah also described the adjustment as a “pragmatic and balanced approach” that takes into account the readiness of MSMEs.
More significantly, she said the higher threshold would allow the Inland Revenue Board of Malaysia (IRB) to focus implementation efforts on taxpayers contributing a larger share of economic activity and tax revenue.
“Not only does the revised threshold provide businesses with additional time to prepare their systems, processes and workforce for compliance before they reach the threshold, it also provides IRB sufficient time to focus implementation efforts on taxpayers that contribute a larger proportion of economic activity and tax revenue,” Farah said.
She added that the move would reduce the immediate compliance burden on smaller firms as they adjust to the government’s broader digitalisation initiatives.
Data, Compliance And Productivity
Meanwhile, for companies already using e-invoicing, Soh said the benefits are increasingly extending beyond tax compliance.
Better data quality, reduced manual intervention and more efficient financial reporting could improve business processes and support productivity gains.
For IRB, the system could provide more accurate and timely information, strengthen risk assessment and help reduce tax leakages.
Soh said improved data could eventually support more targeted audits, faster verification and greater tax certainty for compliant taxpayers.
Farah said e-invoicing also has the potential to improve operational efficiency and reduce the shadow economy over the longer term.
“A practical and focused rollout is likely to support stronger adoption and implementation outcomes, while giving businesses greater confidence to embrace digital transformation as part of their broader growth and governance strategies,” she added.
Policy Direction Remains Intact
Nevertheless, both tax leaders stressed that the RM3 million threshold does not alter Malaysia’s broader digitalisation ambitions.
Soh said continued engagement between IRB, businesses, professional bodies and technology providers would remain critical, alongside clear guidance and sufficient implementation support.
“Overall, the revised threshold is a practical recalibration rather than a change in policy direction,” he said, while emphasising that the destination remains unchanged; only the pace of implementation has been adjusted.
Overall, both leaders highlighted that the increased threshold creates a two-pronged impact: Smaller businesses gain additional preparation time, while authorities can concentrate resources where e-invoicing could deliver greater immediate compliance and revenue benefits, with Malaysia’s push towards a more digital, data-driven tax system remains firmly intact.
