KUALA LUMPUR: The adoption of the e-invoice system is projected to rise sharply over the next few months as more businesses embrace digital compliance and the ecosystem becomes increasingly supportive, according to industry analysts.
PwC Malaysia tax senior manager Zaim Zulkifli highlighted digitalisation as a critical driver, noting that the ongoing shift in business processes positions e-invoicing as the emerging standard across sectors.
"With more companies transitioning to e-invoicing, we expect widespread adoption across industries as the full implementation date of July 1, 2025, draws closer," he told the Business Times.
The growth in adoption is further propelled by regulatory changes. Many taxpayers who have already adopted e-invoicing are currently benefiting from a six-month grace period provided by the tax authority, which allows them to submit consolidated e-invoices.
However, these businesses will soon be required to shift to issuing individual e-invoices for each transaction, accelerating the transition.
"As the ecosystem evolves, we can anticipate enhanced interoperability and integration with various accounting and enterprise resource planning (ERP) systems, making the transition easier for businesses," Zaim noted.
As businesses prepare for the mandate, Zaim said the implementation of e-invoicing places an additional reporting burden on taxpayers.
However, to help ease this, he said the government has introduced multiple e-invoicing validation and reporting options.
These include Application Programming Interface (API) integrations to connect taxpayers' systems directly with the Inland Revenue Board (IRB) or the MyInvois portal, specifically developed for smaller businesses with fewer transactions.
The portal allows these businesses to comply without needing to undertake costly system integrations.
"To address these challenges, small businesses should plan for future growth and consider automated solutions.
"Government support, such as training programmes and financial incentives, can help ease the transition. Exploring cloud-based e-Invoicing options can also provide more flexibility and scalability as the business expands," he said.
The Ministry of Finance (MoF) data as of Oct 14, 2024, reflects substantial progress, with 7,400 companies having adopted the e-invoice system and 58 million e-invoices issued.
The first phase of the e-invoice rollout began on Aug 1, 2024, targeting large companies with annual sales exceeding RM100 million, while the second phase will commence on Jan 1, 2025, involving companies with annual revenues of between RM25 million and RM100 million.
The full implementation will begin on July 1, 2025, involving all businesses, including micro, small, and medium enterprises (MSMEs).
Tratax Sdn Bhd executive director Renganathan Kannan highlighted that this transformation marks a milestone for Malaysia's tax landscape.
"It is evolving from the Self Assessment System introduced in 2000 to the impending full implementation of e-invoicing, a significant validation tool for commercial transactions nationwide," he said.
While he noted that smaller businesses may face challenges in adopting the necessary technology for e-invoice validation, he believes that in recognition of this, the Malaysian government has introduced a flexible approach to e-invoicing compliance to ease the burden on taxpayers.
"To help businesses adjust, the Inland Revenue Board (IRB) provided a six-month consolidation period, giving all operators, including SMEs, ample time to become accustomed to e-invoice processes.
"Additionally, micro-SMEs with annual revenue below RM150,000 are exempt from the e-invoicing requirements," he added.