Small businesses nationwide are preparing for a major transition as Malaysia moves towards mandatory e-invoicing.
All taxpayers, including micro, small and medium enterprises (MSMEs) are required to implement e-invoicing by July 1.
While digital transformation is essential for economic progress, micro-entrepreneurs and small traders face immediate challenges in adapting to the new system.
With small and medium enterprises (SMEs) contributing significantly to Malaysia's gross domestic product (GDP), a smooth transition is crucial to sustaining economic growth.
A TRANSITION TO DIGITAL
For home-based entrepreneur Farah Nordiana, who sells keropok in Kuala Besut to support her three children, compliance with e-invoicing adds to her operational burden.
"Now I must navigate unfamiliar invoicing systems while preparing for my busiest sales period during Ramadan," she said.
Derrick Lee, a small retail shop owner selling car accessories, who recently expanded to online sales, is struggling to manage separate transaction systems for his physical store and digital platform.
Other traders share similar concerns. A dried fish seller from Sekinchan, juggling her grocery store and online business, must comply with the new requirement. Food vendors operating both physical stalls and online delivery services face difficulties in managing different invoicing treatments. Home-based artisans selling across multiple platforms remain uncertain about compliance requirements.
Malaysian International Chamber of Commerce and Industry (MICCI) e-commerce chapter spokesperson Hafidzi Razali said the upcoming Hari Raya Aidilfitri adds urgency to these concerns.
"This festive season is a make-or-break period for many MSMEs, accounting for up to 40 per cent of their annual income.
"The pressure to adopt different compliance requirements at such a critical time could divert attention away from crucial sales opportunities, risking financial setbacks for entrepreneurs already navigating economic uncertainties," he said.
ADDRESSING CONCERNS
While small businesses are already grappling with rising costs and operational pressures, inconsistencies in regulation further complicate matters. Businesses earning less than RM150,000 annually on e-commerce platforms must comply with e-invoicing regulations, while physical retailers under the same threshold remain exempt.
"This difference in regulations creates challenges for online sellers, raising the question, 'Shouldn't all small businesses be given the same regulatory treatment, regardless of where they operate?'" Hafidzi asked.
The MICCI e-commerce chapter is concerned that businesses operating across multiple sales channels will struggle to manage different governance requirements while maintaining operations and customer service. The challenge is compounded by varying compliance timelines within the same industry.
"To ensure a successful transition without undue hardship, we urge regulators to consider a more flexible approach," said Hafidzi.
He called for a clear, standardised compliance timeline and uniform regulations for all small businesses earning below RM150,000 annually, both online and offline.
"Given the upcoming festive season, there is an urgent need to ensure that implementation is consistent to avoid additional complications during this critical period. Alignment with online platforms could ease their compliance burdens and ensure a smoother rollout for all affected businesses," he said.
SUPPORTING SMALL BUSINESSES
Hafidzi stressed the need for a more supportive implementation strategy.
"Small businesses are the heart of our economy. While e-invoicing adoption is important, we must ensure that these entrepreneurs are not left behind. A well-structured adaptation period with proper guidance will lead to better long-term compliance and economic resilience," he said.
While e-invoicing marks a step forward in tax modernisation, its implementation must address the realities of those most affected.
Prioritising education, assistance and a gradual transition will be key in ensuring that small businesses adapt and thrive in the digital economy.
Source: https://www.nst.com.my/news/nation/2025/02/1177076/malaysias-e-invoicing-mandate-supporting-small-businesses