‘There’s time for smaller companies to learn the new system’

PETALING JAYA: Smaller companies will get almost a year’s head start to adopt e-invoicing following the rollout of Phase 1 of the digital billing system on Thursday, says the Kuala Lumpur and Selangor Indian Chamber of Commerce and Industry.

Its president Nivas Ragavan said that although Phase 1 will only involve companies with an annual turnover of above RM100mil, smaller companies dealing with them will have to also become familiar with the new system.

“Even if these smaller companies are not included in the initial phase, they may have to issue e-invoices when dealing with the larger companies under Phase 1.

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“This will encourage the smaller companies to fit into the e-invoicing ecosystem to ensure their businesses remain sustainable while being able to grasp the opportunities of a large market,” he said when contacted yesterday.

He also said that the larger companies have been given ample time to prepare for the migration to e-invoicing as it was announced in Budget 2024 last October.

“This is not like the goods and services tax (GST), where companies needed to completely restructure their billing system.

“E-invoicing is basically moving from the existing electronic invoice to digitisation and regulation by a third party,” he said.

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Last Friday, Inland Revenue Board (LHDN) chief executive officer Datuk Abu Tariq Jamaluddin said that companies will be allowed to only issue consolidated e-invoices during a six-month grace period to ensure the smooth implementation of the Aug 1 rollout.

He also said if there is a request from the buyer, the seller is also allowed to only issue a consolidated e-invoice without issuing an e-invoice for each transaction.

During the first six months, there will be no prosecution action under Section 120 of the Income Tax Act 1967 for non-compliance with e-invoicing regulations, provided that companies comply with at least the consolidated e-invoicing requirements.

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Abu Tariq has also previously assured that the LHDN would handle cases of non-compliance on a case-to-case basis rather than immediately imposing penalties.

Nivas, who is also vice-chairman of the Federation of Malaysian Business Association, said that local business chambers have begun conducting workshops to give a clearer overview and benefits of e-invoicing to smaller companies, although they are not involved in the Phase 1 rollout.

With e-invoicing in place, he said that companies can avoid the usual last-minute rush to get their accounts in order for submission to the relevant authorities at the year’s end.