HR Newsletter

A new e-invoice system to be fully rolled out by 2027 will cut down the burden of recordkeeping
on taxpayers. All e-invoices will be stored in LHDN’s system, with soft copies
available to be downloaded anytime. Taxpayers’ tax return forms will be pre-filled in the
next few years thanks to a new e-invoice system that will be fully rolled out by 2027.
Aside from the government, businesses and individuals can also benefit from better record
keeping processes and reduced tax compliance costs. For instance, they may only need to
keep physical copies of their receipts and invoices for a shorter period of time, instead of
the current seven years. The tax filing process may be easier too, as LHDN can provide
taxpayers with pre-filled income tax forms based on the data that have been collected.
“We believe that the introduction of e-invoicing is something positive that will increase the
efficiency of businesses, provide cost savings in doing business, and strengthen the tax
system in our country by making it fairer and more equitable,” said Datuk Nizom.
“For example, currently, when you go to the hospital to bring your parents for treatment,
you will be entitled for relief as a deduction in your personal income tax later on. “So, under
the e-invoice environment, this transaction will be in our database. And that can be prefilled
to your return forms the following year, which means you don’t even have to
remember what you can claim or how much the claim is,” he said at a LHDN event here
today.

Nizom said even purchases of specific medicines or other items that are tax deductible
would be automatically recognised, as long as the description meets the standards set. The
idea behind the pre-filled forms is to simplify tax return filings by reducing the burden on
taxpayers to manually gather and submit the needed information. More than 45 countries
already have a virtual invoice system as of 2021, according to CNBC.
He said the system will become mandatory for all by January 2027. He said the e-invoice
works by having a seller send the purchase through an LHDN system, with the board
responding with an approved e-invoice to be given to a customer. “We can assure you that
your e-invoice will be issued in a split second. We are able to process 200 to 300
transactions per second. That is how fast the system is,” he said. For small businesses, he
said, a free invoicing solution would be made available to them online, similar to the highly
successful ones used in Brazil and Chile. Nizom said the e-invoice system will become
mandatory for companies with a revenue of more than RM100 million from June next year,
with a total of 4,000 businesses being targeted in the first phase. For those unable to
access the internet at the time of purchase, businesses are required to manually key them
in within 72 hours, he said.
Briefly, e-invoicing is a form of electronic billing, where the digital documents or data of
transactions will be uploaded onto a platform managed by LHDN. With this, LHDN will have
clear records of transactions carried out by taxpayers.