PETALING JAYA: The recent "e-Invoice Guideline (Version 2.1)" issued by the Inland Revenue Board (LHDN) has raised concerns among micro, small and medium-sized enterprises (MSMEs), says the MCA.
In a statement Wednesday (April 17), MCA vice-president Datuk Lim Ban Hong said the government needed to clarify the implementation details to create a more convenient business environment rather than burden the public.
"E-Invoices serve as a new tax management tool which aims to simplify tax processes and increase transparency. Nevertheless, the possibility of risks arising during the execution process cannot be understated.
"Firstly, e-Invoices may challenge businesses to undergo information technology transformations.
"Many MSMEs and petty traders lack sufficient technical capabilities and resources to adapt to this change," he said.
Secondly, Lim said e-Invoices may cause businesses' financial costs to spike, and there were also concerns over security and tax data privacy.
"Since e-Invoices involve a large volume of sensitive information, such as customer and financial data, unauthorised access and misuse by hackers and scammers could cause serious losses to businesses and individuals.
"The government needs to take effective measures to ensure the security and tax data privacy," he said.
Lim also suggested several steps the government should take to enhance the e-Invoice system, including enhancing training and support for businesses, especially MSMEs.
"The government needs to acknowledge the concerns of the general public and the business community and adopt proactive policy measures to mitigate any risks," Lim said.
The full text of Lim's statement can be read below:
Government urged to clarify public and business concerns regarding e-invoicing
The recent "e-Invoice Specific Guideline Version 2.1" issued by the Inland Revenue Board (LHDN), which requires even roadside hawkers to issue electronic invoices (e-Invoice), has raised various concerns among the general public and micro, small and medium-sized enterprises (MSMEs).
Therefore, it is necessary for the government to clarify the implementation details in order to create a more convenient business environment rather than burdening the public.
E-Invoices serve as a new tax management tool which aims to simplify tax processes and increase transparency. Nevertheless, the possibility of risks arising during the execution process cannot be underscored.
Firstly, e-Invoices may challenge businesses to undergo information technology transformations. Many MSMEs and petty traders lack sufficient technical capabilities and resources to adapt to this change. They may need to invest significant time and funds to update their information systems to meet the requirements of e-Invoices.
This would have a burden on business operations and potentially lead to closures or forced market exits for some micro businesses and petty traders.
Secondly, e-Invoices may cause the financial management costs of businesses to spike. Although the purpose of e-Invoices is to enhance tax compliance, businesses may need to hire more financial personnel to handle and manage large volumes of e-invoicing data.
This will increase operational costs and may affect their profitability.
Thirdly, concerns over security and tax data privacy arise with e-invoicing. Since e-Invoices involve a large volume of sensitive information, such as customer and financial data, unauthorised access to and misuse of this information by hackers, scammers and other individuals with mala fide intentions could cause serious losses to businesses and individuals.
Therefore, the government needs to take effective measures to ensure the security and tax data privacy.
Following are four recommendations which I would like to put forward. The government should:
1) Enhance training and support for businesses, such as providing training courses and financial subsidies to help them update their information technology systems and improve their ability to handle e-Invoices.
2) Strengthen regulation of security and tax data privacy, such as establishing stricter data security standards and intensifying supervision of businesses, to ensure that tax data is not subject to unauthorised access and abuse.
3) Take measures to reduce the financial management costs of businesses, such as waiving tax-related fees and providing subsidies for financial management software, to help businesses lower their financial management costs.
4) Establish dedicated mechanisms, such as holding forums, conducting research activities, and setting up online opinion collection platforms, to regularly invite representatives from MSMEs, and petty traders to participate in discussions, listen to their feedback and suggestions, formulate relevant support measures, and address practical issues in the implementation of e-Invoices.
Just recently, the government’s strong advocacy for the Padu (Central Database Hub) system sparked numerous controversies and severely damaged its credibility. To avoid a repeat of the Padu incident with e-Invoices, the government needs to learn from this episode, acknowledge the concerns of the general public and the business community, and adopt proactive policy measures to mitigate risks.
Datuk Lim Ban Hong
MCA vice-president
