The Malaysian Inland Revenue Agency recently announced that it will comprehensively implement the electronic invoice system in stages to strengthen tax collection and management, reduce tax evasion, and effectively curb the development of the underground economy.

It is reported that the implementation of the electronic invoice system will begin this yearStarting from August, it will gradually unfold. In the first stage, the tax bureau will enforce an electronic invoice system for large enterprises and merchants with annual revenue or annual turnover of RM100 million (approximately SGD 28.46 million) or more. Starting from January 1st next year, this scope will be extended to medium-sized enterprises with annual revenue or annual turnover between RM25 million and RM100 million. By July 1st next year, the electronic invoice system will fully cover all taxpayers, whether they are large shopping malls or street vendors, they must comply with the new regulations and issue electronic invoices for tax authorities to inspect and file taxes.

It is particularly noteworthy that all income earned by Malaysians overseas must also follow the electronic invoice system, including overseas property rent, cross-border online transactions, and overseas dividend income. This regulation aims to ensure the fairness and transparency of Malaysia's tax system, and all income, whether from domestic or foreign sources, must be taxed in accordance with the law.

In the "Special Guidelines for Electronic Invoices" issued by the Tax Bureau, it is clear that foreign payers are not required to use Malaysia's electronic invoicing system, but the party receiving income must issue a self issued electronic invoice as proof of income and basis for tax reporting. This is aimed at reducing the burden on foreign payers and ensuring the smooth implementation of Malaysia's tax system.

Tax expert Kong Linglong stated in an interview that the implementation of the new system will not result in double taxation. If the taxpayer has already paid taxes in a foreign country, the tax bureau will provide corresponding tax reductions and exemptions based on the principle of double tax rebates. This regulation will effectively avoid duplicate taxation and protect the legitimate rights and interests of taxpayers.

Cai Zhaoyuan, Director of Taxation and Financial Consulting at the Asian Enterprise Wealth Management Center, pointed out that the implementation of the electronic invoice system will help the tax bureau to grasp real-time transaction information between buyers and sellers, thereby effectively reducing underground economic activities. He emphasized that electronic invoices are legal proof of income and expenses, and after each transaction is completed, relevant information will be transmitted to the tax bureau database in almost real-time, greatly improving the efficiency and accuracy of tax collection and management.

The Malaysian government expects that with the comprehensive implementation of the electronic invoice system, it will effectively curb tax evasion and drive significant growth in national taxation. The first phase is expected to involve5000 merchants, the government expects to receive an additional tax of RM2 billion. This not only helps to enhance the country's financial strength, but also injects new vitality into Malaysia's economic development.