E-invoicing Rollout for SMEs Deferred to 2026

The implementation of e-Invoicing for small and medium enterprises (SMEs) with annual sales between RM150,000 and RM500,000 will be postponed to Jan 1, 2026, with a six-month transition period. Finance Minister II said this would benefit over 240,000 SMEs, allowing them more time to adapt to the system. 

Meanwhile, businesses with annual sales below RM150,000—such as small food vendors—are exempted from e-Invoicing requirements, benefiting over 700,000 small traders. The government remains committed to supporting businesses in transitioning to e-Invoicing, providing free access to the MyInvois portal and mobile app for tax submission. Additionally, free nationwide training is being conducted by the Inland Revenue Board (LHDN).

Since e-Invoicing was introduced in August 2024 for companies with annual revenue above RM100 million, over 25,000 companies have adopted the system, generating 181.3 million e-Invoices. 

On another matter, employers will be required to contribute 2% to the Employees Provident Fund for foreign workers, with a matching 2% contribution from employees. Prime Minister Datuk Seri Anwar Ibrahim announced that this policy will remain in place until further review.

The government justified the move as necessary to ensure equal employment conditions between local and foreign workers, as lower employment costs for foreign workers had previously put locals at a disadvantage. Employers will be eligible for tax deductions on these contributions under Section 34(4) of the Income Tax Act 1967, up to 19% of total employee wages.

SMEs can also claim capital allowances for ICT equipment and software purchases, with the deduction period reduced from four years to three years from 2024 onwards. Additionally, SMEs can claim up to RM50,000 in tax deductions per year on consultancy fees related to e-Invoicing from 2024 to 2027. 

Personally, SMEs with turnover of up to RM3 million should implement e-invoicing in 2026 (and not in July this year). That gives a little more time for adjusting procedures and working arrangements. But, alas, that may not be feasible for a government looking for more tax sources? 

Reference:

e-Invoicing rollout for SMEs deferred to 2026, Shahrizal, BusinessToday, 20 February 2025