DESPITE the introduction of the e-invoice for business that commenced from Aug 1 2024, beginning progressively from large enterprises to enterprises whose annual turnover exceeds RM5 million, many of them continue to face practical challenges in understanding the correct e-invoice treatment for their daily transactions.
The main challenge is that e-invoicing is not simply a replacement for existing invoices. Different transactions may require different e-invoice treatments depending on the nature of the transaction, whether it relates to sales, expenses, payments, receipts or specific business arrangements.
Businesses would have achieved seamless compliance if their accounting systems had accurately incorporated the e-invoice requirements and subsequent updates.
However, this may not always be the case as businesses may encounter situations where systems were not updated timely, certain transactions were not considered during initial implementation, or new business arrangements arose after implementation.
As a result, businesses may unintentionally have e-invoice compliance gaps despite their efforts to comply with the requirements.
Timely help from the government
The government has to be lauded for its generous offer to the taxpayers by providing 18 months of Self Voluntary Disclosure Programme (SVDP) up to Dec 31 2027.
Taxpayers are given an opportunity to review, correct and regularise their e-invoice compliance issues without the imposition of penalties, subject to meeting the prescribed conditions.
This applies to taxpayers who have failed to issue required e-invoices, submitted e-invoices containing errors or incorrect information, or otherwise failed to comply with the prescribed e-invoice requirements.
Common errors
Numerous errors are committed by taxpayers, and the most common error is misunderstanding of self-billing. At the moment, it has been used as default items or as a “dumping yard” where you cannot find a home for certain expenses.
The other common errors are dealing with employee expenses, claims, sales commission paid to employees and/or third parties, rental and utility payments reimbursed or paid by tenants, dividend distributions, importation of goods vs importation of services, disbursements vs reimbursements, etc.
Why enter the SVDP now?
It is advisable to identify and rectify any e-invoicing gaps as early as possible. By doing so, any errors or non-compliance will be confined to a shorter period, from the commencement of your e-invoicing implementation up to the present date.
Delaying the review may result in the same errors continuing over a longer period, increasing the number of affected transactions and making the rectification process more complex and time-consuming. Taking proactive steps now will help minimise future compliance risks and ensure your e-invoicing processes remain aligned with the requirements of the Inland Revenue Board (IRB).
The SVDP should therefore be viewed as an opportunity for businesses to correct past issues while strengthening their internal processes and ensuring future e-invoice compliance.
When can an SVDP submission be invalidated?
The SVDP submission must comply with the specification and requirements prescribed under the relevant tax legislation, e-Invoice general guidelines and specific guidelines. The voluntary disclosure must not involve any fraudulent disclosure.
Post-SVDP (from Jan 1, 2028)
Following the expiry of the e-invoice SVDP, it is expected that the IRB will adopt a stricter enforcement approach towards e-invoice compliance. Taxpayers who fail to comply with the e-invoicing requirements may be subject to compliance reviews and penalties in accordance with the applicable tax laws. It is also unlikely that the IRB will waive any penalties imposed for such non-compliance.
This article is contributed by Thannees Tax Consulting Services Sdn Bhd managing director SM Thanneermalai (www.thannees.com).
