Samenta: Exempt businesses with annual revenue below RM300k from e-invoicing

KUALA LUMPUR: The Small and Medium Enterprises Association of Malaysia (Samenta) has asked the government to exempt any business-to-consumer (B2C) enterprise with revenue under RM300,000 from the upcoming e-invoice regime.

Its national president Datuk William Ng said customers of such micro enterprises should be allowed to issue self-invoice to close the loop, instead of mandating this across the board, and causing irreversible damage to the economy.

Ng said 76.7 percent of all businesses are micro enterprises, with revenue under RM 300,000 per annum.

These include such businesses as barbers, food hawkers and sundry shops with few, if any, employees.

"Whilst we are supportive of the implementation of e-invoicing to enhance tax compliance and curb the shadow economy, the e-invoicing initiative must not unduly disrupt business operations.

"These businesses will be hard-pressed to issue e-invoices. Under this regime, an aunty selling char kway teow will be expected to stop frequently to issue e- invoices to customers. "Even if the aunty learns how to do so, it will still disrupt the business and cause long delays to other customers. Some of these small traders may simply quit and close their businesses," said Ng in a statement.

He said the costs of e-invoicing consulting, IT system upgrade, training and additional employees could result in additional costs of up to RM 200,000 per small and medium enterprises (SME) in the first year, and up to RM 50,000 per annum in subsequent years.

This excludes any penalties and fines for errors and delays in data collection, issuing of e-invoices and submission of consolidated e-invoice.

"As such, given that our SMEs will be investing heavily to help the country fight the shadow economy and achieve higher tax compliance – we can only hope that such sacrifice is reciprocated by the government," he said

Ng said the current e-invoicing process is overly complicated whereby the current 55 fields required in e-invoices are far too many and will be a landmine for non-compliance.

"We appreciate that the Inland Revenue Board (LHDN) has been engaging with the industry and tax professionals to standardise the number of data fields required in e-invoices.

"Given that the first batch of e-invoicing will be implemented on Aug 1, 2024, the government still has time to step in to reduce the amount of data required. "No system is fail-proof, and as such, we must balance the need for accuracy and being practical to reduce incidences of non-compliance and business disruption."

He added Samenta has conducted seven rounds of e-invoicing seminars since January for its members and other SMEs and had reached over 3,000 SMEs.

"The fear and concerns among the SMEs are real, especially of unintentional non-compliance. As such, we are hopeful that the government will take on an 'educate and correct' instead of 'fine and penalise' approach in the first two years of implementation," stated Ng.

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