- 5 months ago
Featuring insights from Harvindar Singh of SCS Global and the Chartered Tax Institute of Malaysia, exploring Malaysia’s E-Invoicing Phase 3 rollout. The discussion covers key issues affecting SMEs, including compliance timelines, technology choices, and the broader impact on tax transparency.
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00:00Phase 3 of Malaysia's e-invoice system rollout kicks off on Tuesday, targeting taxpayers with annual revenue between RM5 million and RM25 million.
00:10Inland Revenue Board, IRB, Deputy Chief Executive Officer, Tax Operations Shaharudi Othman said approximately 55,000 taxpayers are expected to be onboarded in this phase
00:20and expressed confidence that the take-up rate would mirror previous phases.
00:24The fourth and fifth phases of the rollout will target businesses with annual income between RM1 million and RM5 million starting 1st January 2026
00:34and those earning up to RM1 million beginning July 1st, 2026.
00:39And for that, I welcome you. Our guest ready on the set is Havidin Sy, the SCS Global and Council Member of Tax Institute.
00:47I want to say thank you very much, Havidin, for joining us again.
00:49The last time you came to this today, we were talking about the SSC Amendment and Expansion.
00:53And now, we're going to add more discussion within the tax system. It's e-invoice.
00:59And we're at the Phase 3. Phase 3 brings in business with RM500,000 to RM25 million turnover.
01:07Probably, before we discuss long, what's the real goal behind the Phase 3?
01:13Once again, first of all, Nina, thank you for the invitation. It's good to be here.
01:16And Phase 3 basically is for taxpayers with turnover of 5 million to RM25 million.
01:23And so we're in the middle of these five phases of the implementation.
01:28And the idea here is to basically, first of all, initially there were supposed to be three phases.
01:35They've been expanded to four, then subsequently now to five.
01:37It's essentially to give taxpayers more time to be e-invoice savvy and to be able to implement e-invoicing more efficiently.
01:48So what it means for this Phase 3 taxpayers actually is that, also bearing in mind that e-invoicing has its own complexities
01:58and it takes time to get the systems in place, there's a lot of relaxation that actually has been given by the government.
02:06What it means essentially is for the next six months, this category of taxpayers can continue to actually carry on business as usual.
02:15They can issue the normal invoices. You don't have to have an e-invoice in place.
02:19But at the end of every month, within seven days from the end of the month, you have to do a consolidated e-invoice,
02:26which means all these normal invoices that you sent out, you will list them, the amount and the invoice number.
02:34It's just one consolidated e-invoice to be submitted to the IRB.
02:38So that makes life a lot easier because if you talk about individual e-invoices, you need to have the details of the customer.
02:47There are normally six unique details that you need to know.
02:49The name, the text number, the ID, the address, the e-mail address, the telephone number.
02:57And it takes time to gather all this information.
02:59Together everything, yeah.
03:00So with the consolidated invoice, you don't need any such details.
03:05It is just putting the details of your invoice number, the normal invoice that you sent out,
03:09and the amount that's consolidated and submitted to your IRB.
03:12So these six months basically are to enable taxpayers to, you know, don't sit on your laurels,
03:19start getting e-invoices ready.
03:22E-invoicing is here to stay.
03:23It's not going to go away.
03:25It's not going to magically disappear.
03:27Because it's very important for the government.
03:30E-invoicing is a tool to increase compliance, to increase the collections.
03:35And it is hoped that perhaps by the time e-invoicing is implemented in full,
03:40we will have, you know, a 30%, 40% increase in the tax collections.
03:45That's the main driver, of course, behind e-invoicing as well.
03:49Will the grace period will help or hurt?
03:52Because we understand that July to December 2025,
03:55the election period gives businesses more time.
03:57But do you believe it's actually helped them prepare
04:00or just delayed the inevitable rush, actually?
04:04Well, you know, I think at the end of the day,
04:07like I said, e-invoicing is here to fully be, you know, it's going to be implemented.
04:12There are repercussions if you do not comply for the supplier,
04:19the businessman or the party that's carrying on the business.
04:22It's a requirement under the law to issue an e-invoice.
04:26Otherwise, you could face a fine of between 200 and get to 20,000
04:30for each e-invoice that's missing.
04:32So it's down, we're in the self-assessment system.
04:34It's always down to the taxpayer.
04:37It's the responsibility, the onus of proof and responsibilities of the taxpayer.
04:41To ensure that, you know, the requirements are met.
04:45Of course, it can be a challenge to implement invoicing.
04:49You need to train your staff.
04:51You need to have the systems in place,
04:53which, by the way, are becoming increasingly affordable.
04:57It's not going to cost you an arm or a leg, you know, so to speak.
05:02So it is not, to me, I feel,
05:05it is not something that you can just try to escape from by having this escapism.
05:13You need to face the reality and we need to actually look at how to implement it.
05:18So if you delay it, if you wait for the last minute
05:21and you hope that maybe there's another postponement from the government,
05:25which may or may not happen,
05:26because eventually the idea is to have it implemented in full.
05:30And I think however long it takes,
05:34even if it means that there has to be some further postponement or refinement of this,
05:38eventually we will get there.
05:40So I feel the six-month relaxation period is very useful.
05:46The phase three taxpayers know that they are now on board
05:51and at the very least they have to do the consolidated invoice.
05:54So you might as well learn how your actual e-invoicing will take place as well.
06:01And if I may just add,
06:04if you are basically dealing with consumers,
06:07business to consumer transactions,
06:09if you are a restaurant operator,
06:11if you are a supermarket,
06:12if you are a clinic,
06:15you don't actually have to issue an e-invoice for each transaction.
06:19You can still carry on business as usual
06:21and then you do the consolidated e-invoice at the end of the day.
06:24So it is not as, I think,
06:28as tedious or as complex as some may perceive it.
06:32But when you are transacting with another business,
06:36business to business,
06:37then e-invoicing has to be done on an individual basis.
06:40An individual e-invoice is required for every transaction.
06:43So the impact of this may not be all that significant on most parties.
06:52I think what's really important and what I'm glad about
06:56is that the government or the IRB has actually given this relaxation
07:01to enable taxpayers to be prepared to learn the ropes
07:05and try to be e-invoice savvy as quickly as possible.
07:09You have to be tax-heavy for this,
07:11upgrade your skill as well.
07:12That's right.
07:13We understand that, as you mentioned,
07:15that probably one of the basic necessity requirements for us
07:18to register for e-invoice,
07:20we need to have basic ID, numbers, address,
07:23and number of receipt.
07:26And then, but maybe you can share with us
07:27some of the businesses, industry,
07:30probably the small players,
07:31doesn't understand fully the procedure.
07:34Probably they say when the announcement
07:35of a few phases of e-invoice,
07:37okay, now we have to go to class, training programs,
07:39and now we have to provide this,
07:41but they don't know the correct order of this.
07:44Maybe you can share with us,
07:46we know they have guidelines,
07:47a few pages to explain it,
07:49but maybe you can simplify for us
07:51the easy step for them to start
07:53so we understand maybe some of it can become overwhelming
07:57during this process of education.
08:00But maybe you can share with us
08:01what are the correct guidelines or steps
08:03they should start taking from the early,
08:06from taking classes to providing
08:08all the requirement documents
08:09until the end of the deadline?
08:13Okay, I think in a way we are at that phase
08:17or that stage now where firstly we talk about
08:20the systems that are out there
08:22that can be implemented.
08:24They are very friendly and very easy-to-use systems.
08:28I'll just give you an example.
08:31You know, if you go to Starbucks
08:32and you want to buy a drink,
08:36they will issue a normal receipt to you
08:38because Starbucks has already started implementing e-invoicing.
08:42But being a business-to-consumer transaction,
08:44they don't issue an e-invoice to you.
08:46They give you the normal receipt,
08:47but at the bottom there's a link
08:49which basically links you to their,
08:52you know, you go into that link,
08:53it links you to their website.
08:54So the purchaser, if it requires an e-invoice,
08:59you want an e-invoice for yourself,
09:01you can go in and key in those six details.
09:03Okay.
09:03Right?
09:04And submit, enter, it goes into Starbucks system.
09:06Starbucks system is linked to ILB's portal.
09:10The e-invoice is validated and you have it.
09:12It will be emailed to you, etc.
09:14Now, that same system can be tweaked
09:18and has been tweaked by the providers,
09:22you know, the software providers
09:24and this system providers
09:26to be used in the Kedai, Nasi, IAM or whatever as well.
09:31So you go there and you can,
09:34you will be given a tablet.
09:36If it's point of sales kind of transaction,
09:39you press, so the operator presses Nasi, IAM
09:42for RM5 or whatever, it goes into the system,
09:45it gets linked to the ILB's portal
09:47and you have an e-invoice basically given on the spot.
09:50And these systems can actually be, you know,
09:54purchased or subscribed for on a monthly basis
09:58for very affordable prices,
10:00RM100, RM200, RM1,000,
10:02depending on, you know, the requirements of the party.
10:07So to me, I think what's important to share,
10:11firstly, is that there are such systems available.
10:17Basically, the awareness of that is not really out there.
10:21It is not going to, like I said,
10:22cost you an arm and a leg
10:24to basically implement e-invoicing.
10:26If you talk about the starting step for e-invoicing,
10:29very quickly just to go back one step,
10:32an e-invoice essentially is,
10:35from a technical perspective,
10:36it is a, what do you call it,
10:40a representation,
10:41digital representation of the transaction.
10:44If I'm selling my services to you,
10:46I will put in our details,
10:49I will put in your name, my name,
10:52and relevant details, the amounts,
10:54and submit it to the ILB's portal for validation.
10:56For that, I can actually use the IRB's my invoice portal as well,
11:01which is provided free of charge.
11:03So it is there, the facility is there,
11:05and it's quite robust now.
11:06Initially, there were dealing problems,
11:08but it's there for everybody to use as a facility.
11:11And once I've submitted,
11:13that e-invoice will be,
11:15once validated by the IRB,
11:17you and I will both be notified about the validation.
11:20And I can then share that e-invoice to you to say that,
11:25you know, Nina, you owe me this money,
11:26can you please pay?
11:27I can give you a visual representation of that.
11:30And you can either reject it or accept it.
11:33You've got three, 72 hours to reject that e-invoice.
11:37And all these things are actually part of the system
11:40of every e-invoice transaction that's carried out.
11:44And I suppose the understanding of that,
11:46the awareness of that,
11:48that can be shared with the employees,
11:50with the people that are going to implement e-invoicing,
11:54that the entire system,
11:55basically, what it entails,
11:57the processes that are entailed.
11:58So once the e-invoice, you don't reject it,
12:00you accept it,
12:01I have not overbilled you, for example,
12:03it will be in the IRB's portal for the next 10 years.
12:07It's there to stay.
12:09And so, actually, it is,
12:11the whole idea behind this,
12:13firstly, is for the IRB,
12:15for the tax authorities to be privy to the transaction,
12:17to know that I have done such a sale,
12:21they can monitor me,
12:22eventually to see whether I've reported that,
12:24I've paid taxes on that income.
12:26Those are some of the things that are there.
12:28But this entire process of validation,
12:33creation, et cetera,
12:34is simplified in those instances.
12:36What are some of the common mistakes,
12:38usually, for taxpayers?
12:40We know common mistakes,
12:42they typically do within final preparation for this.
12:45Well, the first mistake is to firstly assume that,
12:50you know,
12:51perhaps this can be done at the last minute.
12:54That shouldn't be the case.
12:55That's been the challenge, I think,
12:57for us as the consultants to many of the SMEs, right?
13:02They take this wait-and-see attitude.
13:04But, like I said,
13:05it's not going to go away.
13:06There's been a bit of a deferment,
13:08but it's eventually going to come in.
13:09So, we need to emphasise on the need
13:12to be prepared as quickly as possible.
13:15The other issue is perhaps not understanding
13:19exactly what the requirements are.
13:22For example,
13:23if you are a manufacturer,
13:25a small manufacturer as well,
13:26and you're going to import materials from overseas,
13:30in the past,
13:31you would just do the customs clearance,
13:33you have an invoice coming in from overseas,
13:35you make the payment.
13:36Right now,
13:36there's a requirement
13:37for this manufacturer
13:39to basically issue a self-built e-invoice
13:43within two months
13:45from the end of the month
13:46in which the customs clearance is obtained.
13:48So, you have things like
13:49understanding the requirement for e-invoicing
13:55and then self-built e-invoices.
13:57The differences between the two
13:58need to be understood.
14:00You need to know the deadlines
14:02for the various types of e-invoices to be issued.
14:05So, mistakes will be along the lines
14:07of not understanding,
14:08not knowing,
14:10not doing a proper gap analysis
14:11between your current systems,
14:13what they are and what they should be.
14:15And if I may just add on one more thing.
14:17Really?
14:17To assume that the current system
14:22of, you know,
14:23the e-invoicing that we do,
14:26for example,
14:27if I were to sell my goods to you
14:30or provide my services to you,
14:33currently I will invoice
14:34when the services have been rendered
14:35or the goods have been delivered.
14:38If I receive any advance payments,
14:40it will be recorded as a prepayment
14:41for accounting purposes.
14:42With e-invoicing,
14:45the advance payment requires
14:46an e-invoice to be issued separately.
14:49So, it's an additional transaction
14:51which requires.
14:52Probably my last question,
14:53we have only less than one minute.
14:54What's next after e-invoice?
14:56Do you see e-invoice eventually
14:58link up to SST,
14:59like transfer pricing,
15:01and then even be EPS reporting?
15:04Should the taxpayer be preparing for that now?
15:06Less than one minute.
15:07Yeah, yeah.
15:08E-invoicing actually,
15:09basically,
15:09well,
15:10it's a unified invoicing system.
15:12It will allow for,
15:14you know,
15:14digitalized financial reporting.
15:17It will,
15:18it's actually,
15:20e-invoicing requirements
15:21also have all this data for customs
15:24which can be used for,
15:26you know,
15:26indirect tax purposes,
15:27SST, sales tax,
15:28import duty purposes.
15:31In terms of related pay transactions,
15:33it can also be,
15:35the data can be massaged
15:36to look at,
15:37you know,
15:38the requirements for transfer pricing.
15:39So,
15:40eventually,
15:41if,
15:41you know,
15:42if there's a need to implement GST as well,
15:45the invoicing platform,
15:46it can accommodate GST as well,
15:48right,
15:49because it's,
15:49after all,
15:50an issue of putting in
15:52the transactional tax,
15:53right,
15:53for every transaction that takes place.
15:55I want to say thank you very much.
15:57Unfortunately,
15:57we are at the end of the session.
15:59Definitely,
15:59I will invite you more again
16:00to fully understand
16:02all the system
16:03within the e-invoice SST.
16:05Again,
16:05I want to say thank you very much
16:06so having to see the SES Global
16:08and Council Member,
16:09member of Tax Institute
16:10and definitely
16:11all of our discussion here
16:12will be featured in
16:13astronomy.com
16:14and across all social media.
16:15See you again,
16:16thank you.
16:16Thank you so much.
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