Kuala lumpur: Exempting companies with annual revenue below RM1 million from implementing e-invoicing will ease administrative pressure on small and medium enterprises (SMEs) and allow them to focus on their core business activities, said an economist. Center for Market Education chief executive officer Dr. Carmelo Ferlito highlighted that exempting smaller firms from the immediate requirement would create operating space for businesses that rely on limited manpower.
According to BERNAMA News Agency, Ferlito explained that the administrative burden of e-invoicing could divert resources from the central operations of businesses below the RM1 million threshold, which typically consist of the owner and a small group of employees. He argued that the exemption allows these firms to concentrate on their business rather than on administrative compliance. Ferlito also noted that the exemption would grant SMEs more time to focus on strategy and growth before adopting digital tax tools.
When asked about the potential impact on Malaysia's long-term digitalisation goals, Ferlito stated that digitalisation policies must reflect the structure of the country's business landscape, which is dominated by SMEs. He asserted that digitalisation should not be an isolated objective but should be implemented realistically according to the actual structure of Malaysian capitalism.
The government announced on Saturday that it will raise the e-invoice exemption threshold from RM500,000 to RM1 million next year, following feedback from small businesses regarding implementation costs. SMEs have welcomed the move, recognizing that it will ease compliance costs and provide them more time to adapt to the system.
NovaGrid Sdn Bhd director Aishah Mohamad Afandi mentioned that many SMEs were initially unprepared for the e-invoice requirement, as it introduced new processes and expenses. She expressed gratitude to the government for the exemption, noting that it reduces financial burdens for both businesses and their vendors. Aishah also remarked that the move would enable SMEs to enhance their financial management and improve long-term tax compliance.
She further explained that clearer invoicing and faster verification under e-invoicing could reduce payment delays between companies, a persistent issue for small businesses. SMEs have been attending training courses, many of which are tax-claimable, to prepare for the e-invoice transition. Aishah emphasized that while readiness is essential, tax collection remains crucial for the country. She stressed the importance of stronger cooperation between SMEs, customs, and the Inland Revenue Board for a smooth rollout, describing SMEs as the backbone of the country. She concluded by stating that while e-invoicing is beneficial, adoption will require time.