KUCHING: The approval of consolidated e-Invoicing for Micro, Small and Medium Enterprises (MSMEs) in Sarawak and Sabah is a step towards simplifying tax compliance, but small traders may struggle with implementation, warns Datuk Sim Kiang Chiok.
The Sarawak Housing and Real Estate Developers’ Association (SHEDA) advisor said the new system, which allows MSMEs to consolidate their monthly sales transactions into a single invoice for submission to the Inland Revenue Board (LHDN), would ease administrative workloads.
However, many small traders still lack the knowledge to submit these invoices accurately.
“While it improves efficiency, the compliance requirements could add extra costs and administrative burdens to businesses, especially those with limited resources,” Sim said in a statement today.
He also highlighted Internet connectivity in rural areas as a major challenge for MSMEs, warning that inconsistent or poor access could hinder compliance with the e-Invoicing system and potentially lead to late submissions and penalties.
He also raised concerns about the RM150,000 exemption threshold, calling it too low.
“At RM150,000 per year, this means a turnover of only RM12,500 per month or around RM400 daily.
“Almost all small businesses, including petty traders, would be affected, forcing them to bear additional compliance costs,” he explained.
Many of these small traders, he added, may lack the necessary digital literacy or book-keeping skills to navigate the e-Invoicing system, creating further barriers to compliance.
To ease the burden on small businesses, Sim proposed raising the exemption threshold to RM500,000 or even RM1,000,000, arguing that businesses within this range are more likely to have the technical capability to comply with e-Invoicing without major disruptions to their operations.
“The new compliance requirements could discourage entrepreneurship and small business startups, which would be detrimental to the economy,” he warned.
Sim also questioned whether e-Invoicing would be as effective as the previous Goods and Services Tax (GST) system, which he described as simpler and more transparent while still ensuring tax compliance.
“E-Invoicing may lead to higher operational costs for small businesses without necessarily improving efficiency.
“Instead, it might create an additional layer of complexity, especially for those with limited technical knowledge,” he said.
While supporting tax compliance and digital transformation, Sim urged the government to carefully consider the long-term impact on MSMEs, and ensure that tax policies do not become an unnecessary obstacle to business growth.
