KUALA LUMPUR (Oct 16): The government's decision to defer by two months the implementation of electronic invoicing or e-invoicing for taxpayers with an annual turnover exceeding RM100 million does not appear to be much of a grace period to ensure compliance, according to KPMG.

The audit firm's e-invoicing lead tax partner Ng Wei Wei said the two-month deferment to Aug 1, 2024 from June 1, 2024 may prove too short due to the consideration of various factors, chief of which was the fact that there remained a lot of questions surrounding the new e-invoicing directive, notwithstanding the version 2.0 guideline recently issued by the Inland Revenue Board (IRB), to replace the previous guideline it provided.

E-invoicing is an initiative introduced by the government during the tabling of Budget 2023 to enhance the efficiency of Malaysia's tax administration by digitalisation. It allows for near real-time validation of transactions between a supplier and a buyer, which aims to replace the traditional paper or documents such as invoices, credit notes and debit notes.

Many have expressed their woes on the tight implementation deadline, Ng said, including a need for more time to assess their business readiness to adopt e-invoicing as well as the resources and costs involved.

Hence, notwithstanding the dialogues held with the IRB and the issuance of the e-invoicing guidelines, Ng said it would be worthwhile to consider the following:

i) Further guidance on e-invoicing requirements for specific industries for example insurance, banking and financial institutions, property developer, construction and e-commerce, due to the uniqueness of the nature of the taxpayer’s business;

ii) the software development kit (SDK) based on the e-invoice guidelines, which is expected to be issued in the fourth quarter of 2023, has yet to be issued till this day; and

iii) will there be consideration for tax incentives or government grant in assisting taxpayers in the implementation of e-invoicing?

She is also concerned about whether or not there will be a consideration for tax incentives, tax deduction, tax relief, or government grants in assisting taxpayers in the implementation of e-invoicing.  

Due to the above, Ng said taxpayers would be wise to get a head start on the issue by: brainstorming and assessing existing sales scenarios that may be subject to different e-invoicing requirements; initiating communication on the collection of data for required fields under e-invoicing; and managing internal stakeholders' expectations on their changes in roles and responsibilities.

They should also identify external stakeholders for compliance with the e-invoicing requirements by determining the scenarios for self-billed e-invoices; consider the timeline and data fields required for the consolidated e-invoice; and assess the system changes needed to accommodate the 72-hour timeframe for cancellation/rejection of an e-invoice.

Ng further noted that the latest budget had announced that e-invoicing for taxpayers of other income categories will be enforced in phases, with  comprehensive implementation targeted by July 1, 2025.  

"It remains to be clarified if the implementation target of July 1, 2025 is phased over a specific timeline for the different annual turnover thresholds as announced in the previous e-invoicing guideline, or if all taxpayers are mandated for e-invoicing by July 1, 2025," Ng added.