Micro, small and medium-sized enterprises are not prepared to incur substantial expenses involved in implementing the electronic invoicing regime. (Bernama pic)
PETALING JAYA: Small and medium enterprises are concerned that the electronic invoicing (e-invoicing) system, the first phase of which will be implemented on Aug 1, will have a negative impact on them.
William Ng, chairman of the Small and Medium Enterprises Association (Samenta), said the government should bear in mind that the supply chain is interconnected.
“This means that larger businesses will expect SMEs to issue e-invoices to complete the continuous transaction control (CTC) loop,” he said.
The CTC is a set of processes that enables law enforcement agencies to view in real time or near real time the financial data relating to business activities in their respective countries.
Ng said following the announcement that e-invoicing will come into force on Aug 1, large businesses have begun to send out notices to their vendors, including SMEs, asking them to fulfil the new condition or be delisted.
“Samenta is concerned that even micro enterprises will be expected to meet the new requirement,” he told FMT.
He proposed that small traders with revenue under RM300,000 per year be exempted from the e-invoicing regime.
“They include elderly or less literate Malaysians who will not be able to cope with the process,” he added.
However, Ng expressed appreciation for the government’s decision to exempt SMEs with annual revenue of RM150,000 and below from the requirement.
“We must remember that e-invoicing is not just about learning how to issue the invoice online, even if there’s a free-to-use portal, but it will also have an impact on operations and add another layer of complexity to doing business,” he said.
Ng said the blanket requirement would be a burden to small traders even if they have the option to not issue e-invoices given that some customers may still want such invoices for various reasons.
The spokesman of an e-commerce enterprise, who spoke on condition of anonymity, said questions on the preparedness of SMEs for the new regime is also a matter of concern.
He said the system could trigger a “domino effect” that might force some SMEs out of business.
“While e-invoicing is meant to refine the taxation system, Putrajaya should take into account the concerns of the SMEs, especially ones whose technology adoption rate is relatively sluggish.
“The government also needs to consider the (lack of) readiness among those in the rural areas to implement e-invoicing,” the spokesman said.
He suggested that the implementation of the initiative be postponed for certain industries, including the e-commerce sector.
The spokesman said SMEs would be forced to invest in the digital infrastructure and for periodical maintenance.
“It can take a long time to see a return on that investment,” he added.
The spokesman for a food and beverage company also expressed fears that vendors may be forced to cease operations.
“We know the government wants to improve the taxation system, but they need to consider the fact that many entrepreneurs are ill-prepared,” he said.
He expressed hope that Putrajaya will implement e-invoicing in stages as many online entrepreneurs currently depend on e-commerce platforms to increase their income.
Separately, a businessman who runs a mobile and accessory shop online says he is reluctant to invest in setting up an e-invoicing system as it is costly.
“It would add to my operating cost and affect my cash flow. It could also involve a lot of documentation and require additional manpower to manage it,” he said.
The e-invoicing system is being rolled out gradually, starting with businesses with an annual turnover or revenue of more than RM100 million on Aug 1, 2024, and eventually extending to all businesses by July 1, 2025.
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