GEORGE TOWN: The shift towards mandatory e-invoicing is posing significant challenges for smaller businesses as highlighted by industry leaders.
Small and Medium Enterprises Association of Malaysia (Samenta) national president Datuk William Ng said among the difficulties faced by SMEs are limited resources and digital literacy.
“While the call for small traders to be exempted has been made, the more urgent issue is how SMEs are going to store and approve the e-invoices issued by larger firms. It’s all integrated into the same supply chain.
‘Hard-pressed’: (From left) Ng and Wong say that SMEs are facing challenges with the upcoming implementation of mandatory e-invoicing.
“SMEs will also be hard-pressed to catch up with the large firms despite being given a one-year gap for implementation,” he said recently.
He pointed out that the workshops conducted by Samenta and the Inland Revenue Board (LHDN) revealed the complexity and additional costs of e-invoicing, which could lead to numerous non-compliance issues.
“We agree that e-invoicing will reduce tax evasion and the grey economy. But low literacy and digitalisation levels among our SMEs would make the implementation problematic,” he said.
Fortunately, Ng noted that LHDN has been responsive to these concerns and is working diligently to address them.
Malaysia Semiconductor Industry Association president Datuk Seri Wong Siew Hai echoed similar concerns, particularly on the short implementation period.
He said the imminent commencement date of Aug 1, for companies with over RM100mil annual revenue to prove their income and expenses, is too short for smooth and efficient implementation of the system.
He said other countries had provided a year’s notice for e-invoicing implementation after releasing complete guidelines.
“There have been multiple changes to the requirements in the guidelines, such as the software development kit that was last updated on May 10, and the lack of comprehensive industry-specific FAQs.
“This makes the implementation process a challenging undertaking, coupled with insufficient service providers or IT consultants available to work on the changes required on business processes and the Enterprise Resource Planning systems,” he said.
Wong added that the electronics and electrical industry had requested deferment to prepare and properly evaluate their implementation systems.
He explained that for the system configuration of an in-house Application Programming Interface to link with LHDN’s MyInvois, the time required leading up to user acceptance testing and training would take at least six months.
“As such, it may not be possible for such companies to implement e-invoicing by Aug 1 this year,” he said.
Wong also urged LHDN not to impose penalties on taxpayers who have duly complied with the filing of tax returns which are supported by audited accounts for at least two to three years, if they are unable to comply with the mandated implementation date.
Starting July next year, all businesses in the country are required to switch to the mandatory e-invoicing.
Ahead of its full rollout, LHDN will launch a free software today to help businesses, both big and small, ease into the system.
It was reported that the first phase of the project will begin with about 5,000 companies adopting the use of e-invoices.
The second phase will begin on Jan 1 next year for companies with annual earnings of between RM25mil and RM100mil.
The final phase is for all businesses or enterprises offering sales or services to come on board with e-invoicing by July 1 next year.
