(Tax Update) Common Mistake: Misunderstanding the RM150,000 Threshold for E-Invoice

(TAX UPDATE) Common Mistake: Misunderstanding the RM150,000 E-Invoice Threshold

“My business earns less than RM150,000 a year. I don’t need to issue e-Invoices.”
“Each of my sole proprietorships earns below RM150,000. No need to combine them.”
“We’re a small company under a big group — only RM90,000 revenue. Should be exempt, right?”

We hear these assumptions all the time and they are WRONG.

Yes, the RM150,000 threshold is real.
But the rules come with hidden exceptions.
If you’re not careful, you could fall into the e-Invoice trap — even if your sales are low.

What Is the RM150,000 Threshold?

According to LHDN’s e-Invoice FAQ, businesses with annual revenue below RM150,000 may be exempted from issuing e-Invoices.

This applies mainly to:

Micro businesses
Small traders
Sole proprietors

But this exemption is based on your latest available financial year — typically your 2022 or 2023:

Audited accounts, or
Tax returns (Form B or C)

Important: This exemption does not apply to everyone. Many SMEs still need to comply due to special conditions.

Who Is NOT Exempt — Even with Low Revenue?

Your business has company as shareholder

Example:
Your Sdn Bhd earns RM100,000.
One of your shareholders is a company that earns RM1 million.
Result: You must issue e-Invoices.

You are part of a larger group

Example:
You earn RM80,000 a year.
But your parent company earns RM2 million.
Result: You are not exempt.

You are related to a joint venture or associate company (20% or more shareholding)

Example:
You’re in a JV with another company that earns RM800,000.
Result: You must issue e-Invoices.

Special Case: Sole Proprietors

If you own more than one business under your name, LHDN will combine the total revenue.

Example:
You run:

A goreng pisang stall: RM100,000
A petrol station business: RM80,000
Total: RM180,000

Result: You must issue e-Invoices for both businesses.

Which Financial Year Is Used?

LHDN uses your latest declared financial year to determine if you meet the RM150,000 threshold.

This means:

Audited financial statements, or
Income tax returns

Usually, the IRB refers to data from 2022 or 2023.
So even if your 2024 revenue drops, your status is based on past figures.

Summary for SME Owners

✅ Revenue below RM150,000? You may be exempt
But you are not exempt if:

You have a corporate shareholder
You are part of a group that earns more than RM150,000
You are linked to a joint venture or associate company above RM150,000
You are a sole proprietor with total combined business income above RM150,000

Final Tip from KTP

Many SME bosses assume they are safe — until LHDN sends a reminder or penalty.

To avoid trouble:

Check your company structure
Know your shareholders
Review your past revenue based on official documents

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