KUALA LUMPUR (Oct 26): The implementation of the electronic invoicing (e-invoicing) system will be helpful if the government were to consider reintroducing the goods and services tax (GST), according to the Inland Revenue Board’s chief executive officer Datuk Mohd Nizom Sairi. 

“People are talking about the reintroduction of GST, and if it happens, you don't have to do anything further. It [e-invoicing] is actually something that can cater to the GST system,” he told reporters after Grant Thornton Malaysia’s seminar on the 2024 budget on Thursday. 

While there are minimal additional costs associated with the e-invoicing implementation, as businesses need to invest time and resources to adapt their digital infrastructure to align with tax authorities' requirements, e-invoicing will play a pivotal role in helping the government reach its ambitious 2024 tax collection target of RM185 billion, said Mohd Nizom. 

It was reported last week that Ayer Hitam Member of Parliament Wee Ka Siong asked in Dewan Rakyat about introducing e-invoicing as part of the GST implementation.

"Just bring back the GST; why do we want to spend more on e-invoices when e-invoices are a component of GST? Through GST, everything is more clear and transparent. The problem can be solved with GST," he was quoted as saying. 

In Asean, Malaysia is among the few nations that do not impose GST, besides Brunei and Myanmar. 

Indonesians have been paying GST for 39 years since 1984. Thailand imposed value added tax (VAT) in 1992 and Singapore in 1994. Both Vietnam and Cambodia imposed the broad-based consumption tax in 1999 and the Philippines in 1988.  

Malaysia replaced the sales and service tax (SST) with GST in April 2015, but it was then scrapped in favour of bringing back the sales and services tax (SST) in September 2018, when the Pakatan Harapan government came into power.

On the other hand, Mohd Nizom also acknowledged that the government’s decision to postpone the implementation of e-invoicing for taxpayers with an annual turnover of more than RM100 million by only two months, may not seem sufficient to ensure full compliance.

“Two months is short. However, we are confident that both the IRB and the businesses can meet the upcoming deadline. We are not yet considering an extension of the deadline. We are in constant discussion with the businesses to explain the technical complexities and what they should do.

“I understand that businesses are a little concerned, but we assure them that we can make it happen,” he said. Mohd Nizom was responding to KPMG Malaysia’s report last week, which said the two-month deferment from June 1, 2024, to Aug 1, 2024, may prove too short for full compliance, as businesses need more time to assess their readiness to adopt e-invoicing and the resources, as well as the costs involved.

Meanwhile, Grant Thornton Malaysia Tax Advisory & Compliance senior executive director Chow Chee Yen clarified that the compliance obligations are from the perspective of the issuance of e-invoices.

“In other words, taxpayers are required to issue and submit e-invoices for IRB’s validation, according to the implementation timeline. Any invoice created and issued on or after the implementation date would be required to be an e-invoice. Invoices issued prior to the e-invoicing implementation date applicable to the taxpayers, are not required to be converted into e-invoices,” he said. 

The timeline for mandatory e-invoicing implementation for taxpayers are as follows: 

During the tabling of Budget 2024, Prime Minister Datuk Seri Anwar Ibrahim said the use of the tax identification number will be expanded to support the implementation of e-invoicing, to further broaden the taxpayer net (base), following voluntary tax compliance, which in turn reduces revenue leakage.