PETALING JAYA: Raising the e-invoice exemption threshold to RM3mil may ease the compliance burden for smaller businesses, but industry groups say clearer guidance is needed to prevent large corporate customers from inadvertently passing e-invoice requirements back to exempt suppliers.
SME Association of Malaysia president Dr Chin Chee Seong said exempt SMEs should be able to continue issuing conventional invoices and supporting documents even when dealing with larger companies that have already implemented e-invoice.
“The exemption should not create pressure for smaller businesses to adopt e-invoice simply because their customers were already using the system,” he said in an interview yesterday.
However, Chin acknowledged that different internal procurement, accounting and payment processes among larger companies could create confusion.
“What we do not want to see is exempted SMEs being asked to comply with additional requirements that are not required by LHDN, or their payments being delayed simply because they are not issuing e-invoices.
“The exemption is intended to reduce the compliance burden on smaller businesses, so we should make sure that the burden is not indirectly passed back onto them through the requirements of their larger customers,” he said.
Small and Medium Enterprises Association president Datuk William Ng also said larger corporate clients already subject to e-invoice were actively asking some exempt suppliers for information such as their Tax Identification Number, SSM number and sales tax details.
“Some businesses still believed they could not substantiate expenses for tax purposes without an LHDN-validated e-invoice,” he said, referring to the Inland Revenue Board.
Ng said LHDN should issue clear guidance confirming that conventional invoices and receipts issued by exempt businesses remain valid supporting documents for tax purposes.
He also stressed that payments should not be withheld simply because an exempt SME could not provide an e-invoice.
Tax and accounting expert Datin Christine Koh said an SME covered by the RM3mil exemption could continue issuing normal invoices or receipts when selling to an e-invoice-ready company.
“It does not need to issue an e-invoice simply because its customer is already under e-invoice.
“The larger company can use the supplier’s normal invoice or receipt as supporting documentation for accounting and tax purposes,” she said.
Koh noted that the exempt SME also does not need to register with MyInvois simply because its customer is an e-invoice taxpayer, while buying from an exempt SME does not automatically trigger self-billing.
“Self-bill can only be done when dealing with individuals who are not conducting a business, but not when dealing with a business that is exempted from e-invoice because it has yet to reach the RM3mil threshold.”
She added that businesses could still claim such expenses as long as they kept the usual invoices, receipts and other supporting documents.
Koh said raising the threshold would ease the compliance burden on SMEs, but mean more transactions would remain outside the e-invoice system.
“One of the strengths of e-invoice is LHDN’s ability to capture and cross-check transactions between buyers and sellers. The higher the threshold, the more transactions remain outside this validation network.”
She also cautioned that some businesses could restructure or split their operations to stay below the RM3mil threshold.
Koh also called for greater certainty as the exemption threshold has been raised several times, from RM150,000 to RM500,000, RM1mil and now RM3mil.
“Many businesses acted responsibly and prepared early, spending on accounting systems, software integration and staff training.
“Some may now find themselves exempt after already incurring these costs.
“Businesses can adapt to new tax requirements, but they need a clear, practical and consistent roadmap,” she added.
