THOSE who subscribe to newspapers or businesses with regular suppliers and customers have likely been receiving emails recently requesting their tax identification numbers and other information to prepare for the introduction of e-invoicing.
This step is necessary for businesses.
Certainly, the focus now is on enterprises with annual turnover exceeding RM100mil, as they are required to implement e-invoicing starting Aug 1.
Enterprises with annual turnover below RM100mil still have time to get ready.
The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) recently hosted the Power Chat 4.0, which I moderated, inviting the Inland Revenue Board’s (IRB) CEO Datuk Dr Abu Tariq Jamaluddin to clarify doubts and explain the latest e-invoicing developments.
The media focused on the exemption for micro-enterprises with annual turnover below RM150,000 from the e-invoicing requirement, including consolidated e-invoice submission.
Abu Tariq emphasised the government’s stance is to encourage e-invoicing, with flexibility in handling cases and no penalties without reasonable justification.
The IRB CEO and his team also addressed other implementation questions.
However, due to time constraints, many topics were not covered, including ACCCIM president Tan Sri Low Kian Chuan’s calls to raise the exemption threshold to RM500,000 and postpone full implementation to its original timeline on Jan 1, 2027.
I must emphasise that we understand and support the government’s objective in implementing e-invoicing, but are calling for a phased exemption.
Micro, small and medium enterprises (MSMEs) account for 97.4% of total enterprises, with 78.7% being micro-enterprises.
Forcing these micro-enterprises to fully implement e-invoicing by July 1 next year would undoubtedly cause chaos due to manpower and equipment issues, as well as compliance costs.The RM150,000 annual turnover threshold is too low, likely exempting only a small number of traders.
Instead of covering most unprepared micro-enterprises, which could disrupt the market, increase consumer costs and cause inflation, it’s better to raise the threshold to RM500,000.
This will allow capable enterprises to implement e-invoicing first before the IRB gradually expands it to lower turnover businesses, say RM300,000 and RM150,000 before covering all businesses.
This phased approach will give the IRB time to solve initial technical issues and allow businesses and consumers to gradually adapt.The IRB’s e-invoicing solution, MyInvois Portal, is now open for public testing.
I encourage everyone, regardless of industry or business size, to try it to see how to fill in the relevant information to issue an e-invoice. If they face any technical issues or do not understand what information needs to be filled in, they should ask and provide feedback to the IRB.
This will help improve the portal and minimise inconvenience when e-invoicing is implemented.In previous dialogues, the IRB has said it will develop a mobile application to simplify and automate the process of providing information during e-invoicing transactions, which is welcomed.
From my recent experience in China, I saw that sales staff can issue e-invoices through a mobile app, and consumers only need to show the company’s QR code for the relevant information to be automatically generated on the e-invoice, without manual entry.
Mobile app
The IRB is developing an e-invoicing mobile app and e-POS (electronic point-of-sale) system, expected by year-end and available for free public and business download.
This app should operate similarly to the Chinese model. We should wait for the app’s launch, test its smooth operation, and then gradually expand e-invoicing coverage.
At that point, businesses will no longer have excuses about “not knowing” or “unfamiliarity” with computer systems to avoid e-invoicing, as it will be as simple as using e-wallets.
With a free, mobile-based system, full e-invoicing implementation can then naturally progress.
Recently, Datuk Abu Tariq announced a six-month flexibility period in the implementation of the e-invoicing regulations during the first phase that will commence on Aug 1.
Violators would not be penalised during this period, and businesses only need to submit a consolidated e-invoice for all transactions. This flexibility is extended to all industries and activities, allowing for the issuance of consolidated e-invoices, including self-billed e-invoices.
Incentives for companies
The government would also provide incentives for companies that successfully implement e-invoicing according to the set timeline, by reducing the capital allowance claim period from three to two years for the purchase of equipment and computer software packages made from the assessment year 2024 to 2025.
In addition to the government’s efforts, enterprises, whether small, medium or micro, and whether exempted or not, must proactively understand and learn the e-invoicing operating model, as this is an inevitable trend. Many resist e-invoicing, thinking it will bring trouble and inconvenience due to a lack of understanding. While the initial implementation may impact accounting staff as they adapt to the additional information requirements, these are just transitional issues.
Overall, e-invoicing will not affect business operations, only requiring invoices to be linked to the IRB’s system.
E-invoicing seminars
Businesses can attend recognised e-invoicing seminars, including courses funded by the Human Resources Development Fund, to understand the requirements and make necessary adjustments.
This will help avoid being misled by unscrupulous software providers and unnecessary expenses.
In the long run, with government and enterprise preparation, e-invoicing implementation will bring more benefits than drawbacks – increasing tax revenue, reducing evasion, strengthening tax management, and allowing businesses to reduce errors and improve financial reporting accuracy.
Datuk Koong Lin Loong is managing partner of Reanda LLKG International and treasurer general-cum-chairman of SMEs committee, the Associated Chinese Chambers of Commerce and Industry of Malaysia. The views expressed here are the writer’s own.
