KUALA LUMPUR, Oct 26 — The electronic invoicing system (e-invoicing) implementation will bode well should the government opt to reinstate the Goods and Services Tax (GST).
Simultaneously, it will also help achieve next year’s RM185 billion tax collection target, said Inland Revenue Board (IRB) chief executive officer Datuk Seri Mohd Nizom Sairi.
E-invoicing was designed to accommodate the GST mechanism, and its adoption would certainly push the cash economy and shadow economy to disclose their financial transactions.
“The people are really talking about the reintroduction of GST, and if it happens, you do not have to do anything further. It (e-invoicing) actually caters for the GST system,” he said.
Nizom was speaking to the press on the sidelines of the Grant Thornton Malaysia’s seminar, “Budget 2024 – Budget Highlights and Recent Tax Developments”, earlier today.
He added that, based on country case studies, e-invoicing would require businesses to maintain a comprehensive record of their transactions and fully report it to the IRB.
“There are a lot of activities under the radar which will be forced to come forward and operate above the board,” Nizom said.
It was reported that Malaysia’s shadow economy currently accounts for 21 per cent of the gross domestic product (GDP), or an estimated RM330 billion.
On the cost of e-invoicing implementation, he acknowledged there would be costs involved in adopting e-invoicing, particularly in amending the current taxation system to suit the system’s requirements.
“Definitely, there will be some costs to it, (in making) some amendments to the current system to suit the requirements of the e-invoice, but it will be minimal.
“It is not like when you have to actually build a system fitting GST’s requirements, or you can use a third party to provide an application programming interface to connect between your system and invoice data. In the case of micro, small and medium businesses, we are developing a solution,” Nizom added.
IRB had announced that Malaysia will gradually implement e-invoicing from next year onwards, with the phased mandatory implementation to begin with selected businesses in August onwards and will cover all companies by July 2025.
Meanwhile, the Federal government’s revenue collection in 2024 is expected to record a marginal growth of 1.5 per cent to RM307.6 billion or 15.6 per cent of the GDP, driven by higher tax collection.
Tax revenue continues to be the major contributor and is expected to grow by 6.4 per cent to RM243.6 billion, which constitutes 79.2 per cent of total revenue or 12.3 per cent of the GDP.
The Finance Ministry said direct tax collection is estimated to increase by 6.9 per cent to RM185 billion in 2024, or 75.9 per cent of total tax revenue.
The government has revised its revenue projection upwards for 2023 by four per cent, or RM11.7 billion, to RM303.2 billion, or 16.4 per cent of the GDP, compared with the RM291.5 billion initial estimates.
— Bernama
