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KUALA LUMPUR: The government's decision to raise the e-invoicing exemption threshold offers crucial relief to micro, small, and medium enterprises (MSMEs), allowing them to manage rising operational costs without the added burden of mandatory compliance, experts say.
Already contending with higher raw material prices, labour expenses, and overall operational costs, MSMEs would have faced further financial strain from the e-invoicing rollout.
Associate Professor Aimi Zulhazmi Abdul Rashid of UniKL Business School noted that the timing of the move is particularly crucial for the sector.
"MSMEs are struggling with rising cost of production and operation, increased raw material cost, higher cost of goods within the supply chain and higher staff salary. They are also required to spend on skill upgrades for staff to maximise productivity.
"The recent government policies on pushing up the minimum monthly wages and encouraging progressive salaries certainly put heavy pressure on the overhead of MSME owners," he told Business Times.
The exemption, which now applies to companies with annual revenue below RM1 million, up from the previous RM500,000 threshold, will help MSMEs remain competitive within the Asean market as regional integration progresses.
"Intervention by the government will give MSMEs more time to adjust gradually in line with the labour market changes. However, whether this exception will be a permanent policy is yet to be known; that is highly dependent on the economy and the political direction," Aimi said.
Industries Welcome Exemption
The Federation of Malaysian Manufacturing (FMM) welcomed the move, noting that the exemption gives MSMEs more to digitalise at a pace that is "manageable and sustainable".
"This will help prevent immediate disruptions to operations and avoid additional compliance costs that could further erode their already thin margins.
"The immediate impact of this raised threshold upon rollout next year is that thousands of the smallest SMEs will be able to continue operating without the pressure of sudden system upgrades or mandatory compliance, allowing them to stabilise cash flow and improve internal processes before transitioning," said FMM president Jacob Lee.
Lee added that the higher threshold is a part of a broader and gradual digitalisation pathway rather than a long-term substitute for future adoption.
Over time, SMEs will still benefit from moving onto digital platforms and integrating with their supply chains, said Lee.
"As such, FMM encourages businesses below the new threshold to consider voluntary adoption when ready, as e-invoicing will eventually become a key part of Malaysia's national digital ecosystem," he added.
Lee also welcomed the doubling of the tax refund allocation to RM4 billion.
"We reiterate our call for refunds to be processed within a clear statutory timeframe, ideally within 90–120 days after returns are filed and verified. Where staggered payments are necessary, the Inland Revenue Board should communicate a transparent refund schedule upfront," he added.
ACCCIM and Samenta Support Measures
The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) welcomed the recalibration of regulatory and tax measures to ease the financial burden on MSMEs.
It said the move demonstrates the government's pragmatism in its economic policy implementation while being mindful of the potential impact on businesses.
The association said a doubling of the tax refund allocation would also help businesses struggling with delayed payments and ease their cash flow.
"With these latest policy adjustments, ACCCIM is optimistic that the government has taken a meaningful step toward safeguarding the interests of SMEs, enabling them to stabilise their operations, invest in growth, and contribute more effectively to Malaysia's economic recovery and long-term development," it said.
The Small and Medium Enterprises Association Malaysia (Samenta) said an additional 200,000 MSMEs are expected to be exempted from e-invoicing.
Its national president, Datuk William Ng, said many of the additional SMEs operate on thin margins and lack the digital infrastructure required to comply with e-invoicing in the immediate term.
"For these businesses, the announcement offers much-needed breathing space at a time when they are already grappling with rising costs, tariff uncertainties, growing competition from foreign online sellers, and other unforeseen compliance burdens," said Ng.
Source: https://www.nst.com.my/business/corporate/2025/12/1332996/raising-e-invoicing-threshold-eases-pressure-msmes-bttv