CYBERJAYA (July 26): The Inland Revenue Board (IRB) on Friday announced a six-month grace period to aid taxpayers in transitioning smoothly to the mandatory e-invoicing system, allowing them to issue consolidated e-invoices for all transactions during this period.
This measure will provide businesses with additional time to implement the necessary systems and processes for e-invoicing compliance, IRB chief executive officer Datuk Dr Abu Tariq Jamaluddin told reporters on Friday.
“This flexibility is extended to all industries and activities, allowing for the issuance of consolidated e-invoices, including self-billed e-invoices. Any transaction descriptions can be included in the ‘Product or Service Description’ field.
“If a buyer requests an e-invoice, sellers are permitted to issue a consolidated e-invoice instead of separate e-invoices for each transaction,” he said.
E-invoicing, a digital representation of transaction documents exchanged between suppliers and buyers, will be introduced in three phases.
The first phase begins on Aug 1 for companies with annual revenues exceeding RM100 million.
The second phase, starting on Jan 1, 2025, will apply to taxpayers with annual turnovers between RM25 million and RM100 million.
The third and final phase, effective from July 1, 2025, will extend the e-invoicing requirement to all remaining micro, small, and medium enterprises (MSMEs), regardless of their annual revenue.
Abu Tariq, however, declined to comment on the IRB’s tax collection targets, following full implementation of the e-invoicing next year.
In 2023, the IRB achieved a record tax collection of RM183.3 billion, a 4.49% increase from RM175 billion in 2022.
For 2024, the IRB has set a new record target of RM197 billion. Among focus to achieve the target will be on addressing tax leakage issues, including discrepancies between individuals’ assets and their tax declarations, as well as unreported income from Malaysia held in overseas accounts, Abu Tariq had said earlier in March.
Six-month grace period provides relief to taxpayers, but deferment shouldn't be taken lightly, say tax experts
The six-month grace period initiative announced by the IRB is welcomed by tax experts, as it offers temporary relief to taxpayers and gives them the necessary time to adapt to the new e-invoicing system without facing immediate penalties.
“The government is actually listening to the challenges that companies are facing. With this kelonggaran [flexibility] and the waiver of penalties, taxpayers gain real relief and some comfort knowing that if they don’t comply with the timeline of the mandatory e-invoicing, there will be no penalties,” Soh Lian Seng, head of tax at KPMG Malaysia, told reporters here on Friday.
Having said that, businesses should remain vigilant and not take this opportunity for granted, said Tratax Sdn Bhd executive director Thenesh Kannaa.
“This should not be seen as a deferment. The e-invoicing system is still progressing as scheduled, albeit with some relaxation. It does not mean that businesses can completely ignore the issuance of e-invoice where they cannot issue e-invoice one by one, transaction by transaction,” he said.