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SHAH ALAM – The Malay Economic Action Council (MTEM) supports the government's policy in implementing the e-invoice system as a crucial step towards enhancing tax efficiency and improving compliance within the country's digital economic ecosystem.
MTEM's chief researcher Azlan Awang said that while the council supported the long-term goal, it wished to draw the government’s attention to several pressing challenges in its implementation, which might threaten the survival of micro-businesses, especially Bumiputera micro, small, and medium enterprises (MSMEs).
He said that to facilitate the transition, the government had approved a postponement of the e-invoice implementation to July 1, 2026, along with a six-month transition period for traders with annual sales between RM150,000 and RM500,000.
“This relief only applies to physical sales and does not cover online businesses. MTEM considers this regulatory disparity highly inappropriate, as all small businesses should be protected under the same regulations, regardless of where they operate.
“This one-sided postponement is meaningless or useless for small traders who operate both physically and online, creating policy and implementation injustices.
“Failure to address this could result in hefty penalties for them,” he said.
Azlan said between 100,000 and 200,000 online traders were still not registered with the Inland Revenue Board (IRB) due to inconsistent and very low sales, with average sales estimated at only RM750 per month or RM61 per day.
“The compliance burden on this group is very high and disproportionate. In fact, even if their sales are just RM1 a month, they are still required to issue e-Invoices, while physical traders are exempt,” he said.
Azlan added that the government should be concerned if Bumiputera MSMEs unregistered with LHDN lose access to local e-commerce platforms and shift to foreign platforms.
“The outflow of money due to such a hasty and non-inclusive policy could reach RM1.8 billion a year, mainly from Bumiputera MSMEs,” he said.
He urged the government to provide similar postponement to online traders and exempt those with sales under RM150,000, as was already granted to physical businesses.
“At the same time, the government must provide support systems, digital literacy training, financial incentives, and appropriate technological infrastructure to help MSMEs sustainably adapt to this system, thereby contributing to the national economy,” he said.
Micro traders are not ready
Meanwhile, Malaysia International Chamber of Commerce & Industry spokesman Hafidzi Razali said the e-invoice proposal would affect MSME profit margins due to unpreparedness and lack of digital skills.
He said if the implementation proceeds, it could negatively impact online business competition, especially among low-income traders.
“Most MSMEs don’t understand and are not ready to adapt to the new government policy, including the e-invoice proposal, particularly those with lower incomes.
“They’re also confused why e-Invoice only applies to some groups—some physical businesses don’t have to comply, even if they sell goods and earn similar income.
“It should be implemented fairly across all categories and with more flexibility to educate them.
“The main issue is the lack of consistency and clear expectations from the government regarding this policy’s implementation, which may cause confusion among small traders,” he told Sinar Harian on Tuesday.
Hafidzi further suggested that to address the issue, the government should take a proactive approach to educate society about digital business to foster a more competitive business environment.
He also recommended focusing on online MSMEs, which are already stable in terms of profit margins and income, in order to balance the micro business ecosystem by considering income categories.
“Most traders still don’t understand how to use e-Invoicing because their businesses aren’t sophisticated, and this naturally causes concern.
“To tackle this, the government should first exempt those under certain income brackets.
“The income threshold for mandatory e-invoice use could also be raised until there’s better alignment between physical and online business requirements,” he added.
Need for more flexible mechanisms
According to an e-commerce platform industry player, if micro traders choose to stop online business activities, they risk falling behind in the growing digital economy.
The industry player noted that the policy still has significant weaknesses, especially in terms of implementation coordination and industry readiness, with little room for responsive policy review when concerns are raised.
This, the industry player warned, could result in small traders choosing not to participate in online business or migrating to foreign platforms not subject to e-invoice regulations.
“When they don’t fully leverage the digital economy, they won’t be able to sell their products online to a wider audience.
“If they do leverage digital platforms effectively, they could succeed—just like influencer Khairul Aming.
“The e-invoice proposal is pushing them more towards physical business, which contradicts the very idea of a digital economy, where we should be encouraging more digital business as it offers long-term benefits,” the industry player said, adding that the government needed to establish a more flexible mechanism or policy adjustment that aligns with on-the-ground realities and the concerns raised by industry players, especially online traders and rural business communities.
He also emphasised the need for equal treatment for both physical and online traders to minimise negative impacts on the country's digital business industry.
Furthermore, the government does not need to develop a new system but should leverage existing systems developed by the Malaysia Digital Economy Corporation (MDEC) and LHDN.
“The government should consider targeted exemptions for small online traders, especially regarding compliance with complex technical e-Invoice requirements,” the industry player said.
Source: https://www.sinardaily.my/article/717705/focus/national/mtem-industry-players-push-for-fairer-e-invoice-policy-across-business-types