E-invoicing: Government Rejects Exemptions for Hardware Stores

KUALA LUMPUR, Aug 29 — in a written parliamentary reply, the MOF said it would not exempt hardware stores from issuing e-invoices for purchases below RM500. The ministry said exemptions could create loopholes, discourage participation, and undermine the government’s digitalisation agenda.

The MOF added that hardware stores, along with several other sectors such as automotive, construction, gold, and gaming, are not permitted to use consolidated e-invoices. These merchants must continue issuing receipts and relevant documents for sales under normal business practice.

The e-invoicing system, launched in August 2024, is designed to strengthen record-keeping, reduce tax evasion, and streamline business operations. Since its launch, over 283 million e-invoices involving nearly 29,000 taxpayers have been validated by the IRB.

To ease adoption, the government has temporarily deferred implementation for businesses with sales below RM5 million to 2026, while also introducing a free MyInvois e-POS system for micro, small, and medium enterprises (MSMEs).

E-invoicing

Meanwhile, the Public Accounts Committee (PAC) had, in July, urged the government to reconsider the threshold for mandatory e-invoicing, warning that the current income limit risks overburdening micro and small businesses, even as the Ministry of Finance (MOF) ruled out exemptions for hardware store transactions under RM500.

In a report released on Wednesday, the PAC said the existing threshold for Phase 4 of the e-invoicing rollout — set for 2026 — is “too low” and does not reflect the operational realities of micro-enterprises. Initially, businesses with annual income of RM150,000 and above were to be included. However, the PAC noted that such a threshold could affect nearly 700,000 taxpayer accounts, many of them small traders.

“If the limit were raised to RM500,000, the number of impacted accounts would fall to about 240,000. The PAC believes that the threshold must be practical and not unduly burden the rakyat operating at the smallest scale,” the committee said.

Microenterprises are defined as companies with less than RM300,000 in annual turnover or fewer than five employees. Officials from the Inland Revenue Board (IRB) told the PAC that simplified compliance measures are in place, including consolidated monthly e-invoices, which allow micro businesses to issue just 12 e-invoices annually.

The PAC welcomed the deferments but stressed that further adjustments are needed to avoid disrupting micro traders. “E-invoicing is vital for modernising Malaysia’s tax system, but the rollout must be fair, practical, and tailored to the needs of the smallest businesses,” it said.

Business News