PETALING JAYA: Tax experts have cautioned that the decision to raise the e-invoicing threshold to a turnover of RM1mil annually should not be seen as a reason to delay digital transformation.
They say e-invoicing and broader digitalisation would eventually become standard practice across supply chains.
Accounting firm KPMG’s senior tax policy adviser Dr Veerinderjeet Singh said the higher threshold reflects the government’s recognition of the challenges small and medium enterprises (SMEs) have faced over the past two years, marked by frequent regulatory changes and a difficult operating environment.
“Digitalisation is here to stay, and SMEs should not take their eyes off the ball just because of the higher threshold,” he said when contacted.
He said many SMEs, even the smaller ones, are already making concerted efforts to digitalise their accounting and reporting processes.
He noted that affordable digital tools are increasingly accessible, even for smaller businesses, making early preparation both feasible and prudent.
Addressing concerns that large corporations may begin rejecting suppliers who are unable to issue compliant e-invoices, he said such practices are not yet widespread.
However, Veerinderjeet warned that this is likely to evolve as e-invoicing becomes embedded across corporate procurement and reporting systems.
“In the long run, large corporations will require all their suppliers to comply with e-invoicing regulations and issue invoices in the prescribed format,” he said.
He also cautioned that SMEs who delay preparation risk facing payment delays or losing good business opportunities.
He urged SMEs to use the additional time to familiarise themselves with e-invoicing guidelines, seek support from trade associations and consult tax advisers or accounting firms.
“SMEs should also review the tools provided by the Inland Revenue Board and gradually adjust internal processes to ensure smoother implementation.
“This is not something that can be ignored. SMEs need clear timelines and targets to learn, adapt and implement e-invoicing progressively,” Veerinderjeet said.
Industries Unite Malaysia group coordinator Datuk Irwin Cheong praised the government for increasing the threshold to RM1mil.
“This will help to ease the burden of implementation to SMEs, especially small enterprises.
“We think that implementation and enforcement are two different addressable matters,” he said.
He said that implementation and enforcement should be treated as separate matters, as enforcement involves not only invoice formats but also broader reporting and supply chain mechanisms.
“This will allow many SMEs to have more time to streamline their processes to ensure automation and processes are administered accordingly.
“We do not foresee a big change in orders rejected or acceptance purely due to e-invoicing, as all reporting is done accordingly by its original company.
“E-invoicing or standard invoicing are just formats acceptable by both MNCs or SMEs,” he said.
Meanwhile, tax consultant Datin Christine Koh said digital readiness is now both affordable and practical, even for micro businesses.
“Some cloud accounting software costs below RM100 per month, and invoices can be issued using a mobile phone without heavy investment.
“Digital invoicing is more time- and cost-efficient than handwritten invoices that still require manual re-keying and are prone to errors,” she said.
Koh said she is already seeing larger companies adjusting their internal practices ahead of any legal changes.
“While expenses are still deductible with existing supporting documents, we foresee that future amendments may only allow tax deductions where e-invoicing is required and properly issued.
“Non-registrants may be perceived as very small businesses, affecting confidence among corporations and MNCs,” she said.
She advised SMEs to digitalise early to avoid disruption as businesses grow beyond RM1mil or if thresholds are reviewed in future.
