LHDN e-Invoice for Penang renovation contractors

Most Penang renovation contractors we speak to believe one of two wrong things about LHDN e-Invoice: either that it already applies to them and they are quietly non-compliant, or that it is a big-company problem they can ignore. The rule that decides which of those is true is a single number, and a second rule that almost nobody knows about hits construction contractors harder than any other trade.

This guide covers who is in scope, what the relaxation period until the end of 2027 actually buys you, and the construction-specific carve-out that changes how you invoice a homeowner.

This is general information, not tax advice. The figures below are taken from LHDN's own e-Invoice Guideline, e-Invoice Specific Guideline and General FAQs as published at the time of writing. The timeline was last revised on 7 December 2025. Confirm your own position with your tax agent before changing how you invoice.

The one number that decides it: RM1 million

LHDN rolled e-Invoice out in phases by annual turnover. The final phase caught everyone else.

Then the exemption that matters to most of this trade:

Taxpayers with an annual turnover or revenue of less than RM1,000,000 are exempted from e-Invoice implementation.

That threshold was raised from RM500,000 to RM1,000,000 in the 7 December 2025 revision. If your renovation business turns over less than RM1 million a year, you are exempt. Not deferred, not in a grace period. Exempt, including from consolidated e-Invoice and self-billed e-Invoice requirements. LHDN encourages exempt businesses to adopt e-Invoice voluntarily, but you are not required to.

For a solo Penang renovation contractor running two or three jobs at a time, RM1 million of annual turnover is roughly a full order of magnitude above where most sit. For an established outfit running multiple crews across the island and Seberang Perai, it is very reachable.

Three positions you could be in

You turn over less than RM1 million. Exempt. Keep issuing normal invoices. Read the growth trigger below so it does not surprise you later.

You turn over between RM1 million and RM5 million. Your implementation date was 1 January 2026. You are in scope now, with the relaxation described in the next section running until 31 December 2027.

You started the business in 2023, 2024 or 2025 and have not crossed RM1 million. LHDN set a concessionary implementation date of 1 July 2026 for this group. If you meet the exemption criteria you stay exempt; if you do not, 1 July 2026 is your date.

The growth trigger

This is the part that catches a contractor after one unusually good year. Once your annual turnover reaches RM1 million in YA2026 or later, you must implement e-Invoice from 1 January in the second year following the year you crossed it. Cross RM1 million during 2026 and your date is 1 January 2028. Cross it during 2027 and your date is 1 January 2029.

Two consequences worth planning around. You get a long runway, so there is no need to panic in the year you cross. And once you have been mandated, you stay mandated. If turnover later falls back below RM1 million, the obligation does not lapse.

The relaxation period until 31 December 2027

Every phase came with an interim relaxation period. For the up-to-RM5 million group, covering both the 1 January 2026 and 1 July 2026 implementation dates, that period runs until 31 December 2027.

During it, LHDN's Specific Guideline says you may:

• Issue a consolidated e-Invoice for all activities and transactions, including the industries and activities that are normally barred from consolidation
• Put any description you like in the "Description of Product or Service" field, rather than the receipt or reference numbers normally required
• Decline to issue an individual e-Invoice even when the buyer asks for one, provided you are consolidating as above

And critically:

the IRBM will not undertake any prosecution action under Section 120 of the Income Tax Act 1967 during the interim relaxation period on non-compliance of the e-Invoice requirements

Read that carefully, because it is narrower than it sounds. The protection is conditional on you actually issuing the consolidated e-Invoices. The relaxation is not a waiver of the obligation. It replaces a per-transaction obligation with a monthly consolidated one, and consolidated e-Invoices must be submitted within seven calendar days after month end.

So a contractor in scope from 1 January 2026 is not free until 2028. They are required, right now, to submit a monthly consolidated e-Invoice covering their jobs.

The rule built specifically for construction

Here is the one almost nobody in this trade has been told.

LHDN's Specific Guideline lists activities where a consolidated e-Invoice is not allowed and an e-Invoice must be issued for every single transaction. Alongside motor vehicle sales, flight tickets, luxury goods and betting pay-outs sits this entry:

Most trades can invoice walk-in customers all month and settle up with one consolidated e-Invoice. Construction contractors cannot. Once the relaxation ends on 31 December 2027, a contractor in scope must issue a validated e-Invoice for each construction contract transaction, whether or not the homeowner asks for one and whether or not the homeowner has a tax file.

There is a second, general rule in the same list that applies to every industry:

Any single transaction with a value exceeding RM10,000. Note that this will be effective starting 1 January 2026.

For renovation work, a threshold of RM10,000 is not a large job. A single kitchen, a re-wire, a full bathroom, most extension progress claims: all above it.

Note the interaction, because it is genuinely ambiguous in the published guidance. The relaxation text says you may consolidate everything including the barred activities, which on its face covers the RM10,000 rule too, since that rule sits in the same list. Several commercial e-Invoice vendors publish the stricter reading, that jobs over RM10,000 need an individual e-Invoice from 1 January 2026 regardless. We are not going to pretend that is settled.

The practical answer does not depend on resolving it. Issue individual e-Invoices for jobs over RM10,000 now, because that is what you will have to do from 1 January 2028 anyway, because a commercial buyer will demand one to claim the deduction, and because building the habit on a handful of large jobs is easier than rebuilding your whole billing process in a single December.

What this means for a normal Penang renovation job

Take a RM48,000 kitchen and wet-area job for a homeowner in Bayan Lepas, and a contractor turning over RM2 million a year.

Today, during the relaxation. You must include that job in your monthly consolidated e-Invoice, submitted within seven days of month end. If your system is ready, you can issue an individual e-Invoice instead, and many contractors do because it is less work than reconciling a consolidated submission.

From 1 January 2028. That job needs its own validated e-Invoice. It is a construction contract, so the consolidation route is closed, and at RM48,000 it is far above the RM10,000 line as well.

If you turn over under RM1 million. None of this applies. Issue your normal invoice.

The awkward case is the homeowner who does not want to hand over identification details. You still have to issue the e-Invoice; the buyer's details are your obligation to collect, and LHDN provides general details to use where a buyer is an individual who does not require an e-Invoice. Build the request into your quotation stage rather than chasing it after the job is done, when the customer has no reason left to reply to you.

What you need before you can issue one

• Your TIN. Your tax identification number, and your SSM registration number.
• Buyer details. For business customers: their TIN, SSM number, address and contact. For individual homeowners: the details LHDN specifies for buyers who do not require an e-Invoice.
• A submission route. Either the MyInvois portal or accounting software that submits through the MyInvois API.
• Line-item discipline. Classification codes and clean descriptions per line. Contractors used to quoting a single lump sum for "renovation works" tend to find this the real change, not the software.

Portal or software

The MyInvois portal is free and works for every business. It is also entirely manual: you key each invoice in and submit it. At a handful of jobs a month that is genuinely fine, and there is no reason to buy software you do not need.

Above that, the keying and the month-end consolidated submission become the bottleneck, and most contractors move to accounting software that submits for them. Options built for the Malaysian format include AutoCount and SQL Account, both long-established here, and lejar.ai, which includes MyInvois submission on every plan including its free tier. What matters more than the brand is that it submits through the MyInvois API rather than producing a PDF you still have to key in by hand.

If you are the homeowner reading this

Two things are worth knowing when you hire.

A contractor who is in scope and issuing proper e-Invoices is, indirectly, a contractor with real books, an SSM registration and a tax file. It is a weak signal of formality rather than a guarantee of workmanship, but it is a real one, and it costs you nothing to ask.

A contractor who is exempt is not doing anything wrong. Under RM1 million of turnover is where most good small renovation outfits in Penang genuinely sit. Do not read exemption as a red flag.

If you need an e-Invoice for your own tax purposes, say so at the quotation stage. Asking after the work is done is where it gets difficult for both sides.

The dates in one place

Sources

• LHDN e-Invoice Implementation Timeline, updated 7 December 2025
• IRBM e-Invoice Guideline
• IRBM e-Invoice Specific Guideline, section 3.7 and Table 3.6, and section 16 on the interim relaxation period
• LHDN e-Invoice General FAQs

Rules in this area have already been revised more than once, including the exemption threshold and the length of the relaxation period. Check the current LHDN guidance before acting on any date above.