For months, many SME bosses were confused by one simple question in the e-invoice system:

“Is this a related company?”

There was no clear guideline, and everyone had their own guess.

On 9 July 2025, LHDN finally gave us the answer.

From now on, the definition of a “related company” follows Section 2 of the Promotion of Investments Act 1986.

So, when is a company considered related?

✅ When one company controls another
✅ When both companies are controlled by the same person or entity

This includes both direct and indirect control … it’s not just about shares.

The 20% Rule – If one company owns 20% or more shares in another, they are automatically related.

Who does this apply to?

Only companies registered under the Companies Act 2016 that means Sdn Bhd and Berhad.

Sole proprietors and partnerships are not included.

Hope this clarification removes the guesswork. SME owners can now confidently answer the “related company” question when submitting e-invoices.