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Navigating the Shift to E-Invoicing: Challenges and Opportunities in Malaysia

Updated: Oct 24, 2023

The chart below shows that global trends and the adoption of e-invoicing are important as they reflect the urgent need for digital transformation in the international business and government sectors.

The upcoming e-invoicing policy in Malaysia is also significant for businesses and taxpayers. It will help reduce the complexity of the tax process, improve tax compliance, and facilitate faster transactions and tax returns.

The Malaysian Budget disclosed the government's decision to make e-invoicing mandatory from 1 August 2024 for taxpayers with annual sales or income exceeding RM100 million.

On the other hand, the government advanced the mandatory implementation timeline for other taxpayers to 1 July 2025, meaning that even small vendors will be required to use e-invoicing.

This is a positive move to boost the digital economy. E-invoicing can improve efficiency, reduce the complexity of the tax process, and help businesses better adapt to the demands of the digital age.

However, the government's decision to bring forward the e-invoicing implementation timetable to 1 July 2025 presents challenges and dilemmas for all businesses. In particular, micro-enterprises, home-based businesses, and even small vendors may face the following issues:

Lack of technological readiness: some microenterprises, home-based businesses, and small vendors usually do not have a sound digital technology base and, therefore, need more time to adapt to the e-invoicing system. Lack of technical knowledge and resources may lead to problems during implementation.

Cost pressure: Adopting an e-invoice system may require some investment, including purchasing necessary software and staff training. Small vendors may feel an increased financial burden.

Complexity of tax payment process: For vendors who have never used e-invoicing before, the new tax payment process may become more complex and require more time to learn and adapt.

Customer adaptation period: Customers also need to adapt to e-invoicing and may need more time to understand and accept the new payment method.

The government should consider these issues when implementing e-invoicing in advance and provide support and training to ensure a smooth transition to the new system for all taxpayers. At the same time, businesses will need to proactively prepare and find appropriate solutions to ensure they are able to comply with government regulations without too much disruption.

Overall, adopting e-invoicing is undoubtedly an inevitable trend in the digital age, with a wide range of benefits. However, prior implementation, in-depth knowledge and preparation are vital to ensure a smooth transition.

Firstly, businesses and governments need to understand how e-invoicing systems work and their processes. This includes learning how to create, deliver and store e-invoices, as well as how to ensure compliance and data security. A thorough understanding will help avoid operational errors and regulatory violations.

Next, training and education are critical. Employees need to be equipped with the skills to use an e-invoicing system, including using relevant software and tools. The government can provide training courses, while companies can conduct their own in-house training to ensure employees are proficient in their new skills.

Finally, compliance and data security must be emphasised. Governments and businesses must ensure that their e-invoicing systems comply with regulatory requirements and take the necessary steps to protect sensitive data. This helps build trust while reducing potential risks.

Considering that the Software Development Kit (SDK) has yet to be released and there are less than ten months to get it ready, we would like to ask the government if this is the right thing to do.

Attachments | 附件:

e-invoice Guideline | 电子发票指南

241.1.1 IRBM e-invoice Guideline (Version 2.0)
Download PDF • 1.14MB

e-invoice Specific Guideline | 电子发票具体指南

241.2 e-Invoice Specific Guideline Version 1.0 (published on 29 September 2023)
Download PDF • 2.56MB

e-Invoice Catalogue | 电子发票目录

241.3 e-Invoice Catalogue (published on 29 September 2023)
Download XLSX • 190KB

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