E-invoicing set to make life easier

The implementation of the electronic invoicing system (e-invoicing) from next June at selected businesses should be viewed positively as it helps enhance business efficiency, say business groups.

While it is not as complicated to implement, they said the cost is minimal as the Inland Revenue Board (LHDN) is developing and providing the platform.

Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) treasurer-general Datuk Koong Lin Loong said many business operators misunderstood e-invoicing, thinking they need to upgrade their accounting software.

"It involves minimal cost as the platform is complementary efforts from the LHDN."

"It is not so complicated compared to the implementation of the Goods and Services Tax (GST) as claimed by some quarters."

"E-invoicing is just a shift in the way businesses issue invoices to a digital platform, like how we used to pay cash and moved on to using e-wallet, which involves digitalisation," he said in an interview yesterday."

While the MyInvois portal is a free solution hosted by LHDN, Koong said it is accessible to all business taxpayers at no cost by just inputting the necessary details to issue e-invoices.

"If a business is used to issuing handwritten invoices, then they must prepare themselves to use the platform to do so."

"This is not an automation of the businesses' finance department, just invoicing."

"However, if businesses want to revamp and link it to their accounting system, it will definitely incur extra costs to do so," he said.

This, he added, can be done via some configurations, which will be detailed in the software development kit (SDK) that the LHDN is issuing to businesses in the fourth quarter of this year.

LHDN announced that Malaysia will gradually implement e-invoicing from next year.

The phased mandatory implementation will begin with selected businesses in June 2024 and will cover all companies by 2027.

From next January, companies can adopt e-invoicing voluntarily.

The timeline of the mandatory e-invoicing implementation is as follows:

June 2024: For businesses with an annual turnover of RM100mil or more;

January 2025: Businesses with an annual turnover of RM50mil or more;

January 2026: Businesses with an annual turnover of RM25mil or more; and

January 2027: All other business taxpayers.

National Chamber of Commerce and Industry of Malaysia (NCCIM) president Tan Sri Soh Thian Lai said that despite the development of the MyInvois portal, bigger companies with high transaction volumes may opt to upgrade their own systems.

"We have received feedback from our bigger member companies that the current timeline provided for implementation by June 1, 2024, may be challenging and insufficient given the complexity."

"While the mandatory implementation initially targets companies with an annual turnover of RM100mil from June 1, 2024, it is important to consider the impact on stakeholders who will not be subject to the implementation at the same pace."

"Moreover, the absence of the SDK at this stage means companies will have a shorter lead time to implement," he said.

While the longer lead time for micro, small and medium enterprises (MSMEs) to adopt the e-invoice system is welcomed, Soh said the implementation can be challenging due to its technical complexity and potential costs.

"Using the MyInvois portal hosted by LHDN is an option, but it requires manual data input and could be time consuming, especially with a high volume of invoices and additional manpower needed."

"It is crucial to provide training and support staff to use the system and resolve any issues, particularly for businesses without an IT department like the larger companies."

"An extended adjustment period will allow sufficient time for businesses to adapt to the new workflow," he said.

As technological advancements continue to shape various aspects of business operations globally, Soh said the integration of technology into tax administration management is inevitable.

"Smaller companies can proactively initiate their planning process by attending information-sharing sessions on e-invoicing by trusted parties."

"Conducting an impact assessment is essential for understanding technical systems, process changes, and data requirements to determine the most suitable solution," he said.

SME Association of Malaysia (Samenta) chairman Datuk William Ng expects smaller companies will likely adopt e-invoicing sooner than scheduled.

"Although it starts with the larger companies, however in reality, most businesses are integrated within the supply chain. So, smaller-sized businesses will likely have to adopt e-invoicing earlier," he said.

To defray the initial costs of implementation and encourage more SMEs to go digital, Ng proposed the government provide a one-off grant of up to RM10,000 per SME to upgrade their existing accounting software and train their employees.

"We are phasing in the e-invoicing regime over the next four years and SMEs will have time to get ready."

"We call on all SMEs to adopt e-invoicing soon, regardless of the timeline. We will be working with the LHDN to educate SMEs on this matter," he added.

*This article was originally posted on the official website of The Star on 5 October 2023.