What is the penalty for not issuing e-invoices in Malaysia?
Non-compliance can be prosecuted under s.120(1) of the Income Tax Act, with a fine of RM200 to RM20,000, up to six months in prison, or both. LHDN will not prosecute during the relaxation period if the consolidated e-invoice conditions are met, and has a voluntary disclosure programme to 31 December 2027.
LHDN's penalty table lists the general offence under s.120(1): failing, without reasonable excuse, to comply with the Act's requirements carries a fine of RM200 to RM20,000, imprisonment of up to six months, or both. Secondary guides link e-invoice breaches to s.120(1); the guideline itself refers to s.120.
Relaxation period: Specific Guideline v4.9 says LHDN will not prosecute under s.120 during the interim relaxation period if the taxpayer complies with the consolidated e-invoice rules. For the up-to-RM5 million group the period runs to 31 December 2027.
Voluntary disclosure programme: from 7 July 2026 to 31 December 2027 businesses can regularise missed or defective e-invoices. LHDN will not impose penalties or prosecute for invoices disclosed under it, except where the disclosure is non-compliant or involves fraud, wilful default or negligence. LHDN may also run e-invoice compliance reviews.
Other consequences: a missing e-invoice can create problems for your customer's expense claim.
What to do: confirm your phase, set up MyInvois access, keep submission records, and fix gaps through the disclosure programme before relaxation ends.
Legal basis
- Income Tax Act 1967, s.120(1)
Sources
Applies to 2026-2028 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- What is the penalty if my CP204 estimate is too low?For companies the penalties sit in s.107C. If tax payable exceeds the latest estimate by more than 30% of the tax payable, 10% is charged on the part of the excess above that 30% (s.107C(10)). An instalment not paid by its due date carries 10% of the unpaid amount (s.107C(9)). With no estimate at all, 10% is added to the tax payable.
- How far back can LHDN audit my company or raise additional tax?LHDN can generally raise an additional assessment within five years after the end of the year of assessment, and seven years for transfer pricing. These limits do not apply to fraud, wilful default or negligence.
- What should I do when LHDN sends my company an audit or query letter?Read the deadline, appoint a tax adviser if needed, collect the documents requested, reply on time, and correct any errors you find. Ignoring a notice for information can itself be an offence with a fine of RM200 to RM20,000.
- What is the penalty for understating income or giving incorrect information on a tax return?On prosecution, s.113(1) carries a fine of RM1,000 to RM10,000 plus 200% of the tax undercharged. Wilful evasion under s.114 can mean 300%, a fine of RM1,000 to RM20,000 and up to three years in prison. LHDN can instead require a penalty of 100% of the tax undercharged under s.113(2).
- What is the corporate tax rate for a small company in Malaysia?A Malaysian resident company normally pays 24% income tax. A company that meets the SME conditions pays 15% on the first RM150,000 of chargeable income, 17% on the next RM450,000 (up to RM600,000), and 24% on anything above that.