RM1M e-Invoice Threshold Eases Pressure On SMEs, Says Economist

By K. Naveen Prabu and Muhammad Fawwaz Thaqif Nor Afandi

KUALA LUMPUR, Dec 9 (Bernama) -- Exempting companies with annual revenue of 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 said exempting smaller firms from the immediate requirement would create operating space for businesses that rely on limited manpower.

“The implementation of e-invoicing is an administrative burden which can drain resources from the core businesses of firms below the RM1 million threshold, which usually consist of the owner and a very small group of employees.

“The exemption frees time and resources to focus on business rather than questionable administrative compliances,” he told Bernama. 

Ferlito said the exemption would give SMEs more time to focus on strategy and growth before adopting digital tax tools.

Asked whether the exemption will affect Malaysia’s long-term digitalisation goals, he said digitalisation policies must reflect the structure of the country’s business landscape, which is dominated by SMEs.

“Digitalisation cannot be a target in itself. It has to be grounded on the actual structure of Malaysian capitalism, which is fragmented,” .

Therefore, digitalisation cannot be used as a slogan but needs to be applied in a reasonable way and according to the reality on the ground,” he said.

On Saturday, the government announced it will raise the e-invoice exemption threshold from RM500,000 to RM1 million next year after receiving feedback from small businesses on implementation costs.

Meanwhile, SMEs have welcomed the move, saying it will ease compliance costs and give them more time to adapt to the system.

NovaGrid Sdn Bhd director Aishah Mohamad Afandi said many SMEs were initially "caught off guard" by the e-invoice requirement, as the additional system layer involved new processes and expenses. 

“We were very grateful to the government for the implementation because it reduces the financial burden, not just for us but also our vendors,” she told Bernama.

She said the raise would allow SMEs to strengthen their financial management and improve long-term tax compliance. 

According to her, clearer invoicing and faster verification under e-invoicing could also shorten payment delays between companies, which has been a long-standing issue for small businesses. 

She added that SMEs have been using the opportunity to attend training courses, many of which are tax-claimable, to prepare for the e-invoice transition.

“Whether we are ready or not, one way or another we must be ready because this is the way forward. Tax is a very important collection for the country,” she said.  

She added that stronger cooperation between SMEs, customs and Inland Revenue Board would be crucial for a smooth rollout, describing SMEs as the backbone of the country. 

“We want to expand understanding, not scare people about e-invoicing. It’s a good thing, but adoption will take time,” she said.

-- BERNAMA