LHDN receives over 2.09 billion e-invoices, uses data analytics to improve tax compliance
KUALA LUMPUR: The Inland Revenue Board (LHDN) has received more than 2.09 billion e-invoices since the digital transformation initiative was introduced in stages nationwide.
The Inland Revenue Board (LHDN) in Malaysia has processed over 2.09 billion electronic invoices since implementing a digital transformation initiative across the nation. This milestone highlights the growing acceptance of a more organized and transparent approach to tracking transactions. Mohd Syazli Mokthar, Director of Policy and Compliance in the LHDN Tax Operations Sector's E-Invoice Division, shared that the initiative is in its third year and has already registered more than 269,000 taxpayers.
The e-invoice system generates extensive data, which is crucial for LHDN to gain a deeper understanding of the economy and market transaction trends. This represents a significant shift from traditional paper-based records to digital formats. Director Mokthar explained that the transition not only enhances business efficiency but also brings about a more effective tax compliance process.
One of the key features of the e-invoice system is its integrated data analytics functions. These tools automatically filter, process, and analyze taxpayers' financial profiles upon the submission of digital invoices. The analytics module offers descriptive, diagnostic, predictive, and prescriptive capabilities, allowing for trend forecasting.
However, Director Mokthar clarified that these variations in data patterns do not necessarily indicate any wrongdoing on the part of taxpayers, as they can also arise from account adjustments or changes in reporting timelines.
Non-compliance has been a concern, particularly with businesses primarily issuing e-invoices for commercial stock transactions while neglecting other activities such as the disposal of business assets and rental income. Additionally, confusion has arisen regarding the issuance of self-billed e-invoices for suppliers who have not yet been mandated to join the system. These transactions are only applicable to specific cases as outlined in the guidelines.
To assist businesses in rectifying mistakes and clerical errors, LHDN has introduced the E-Invoice Special Voluntary Disclosure Programme (SVDP) until December 31, 2027. This program grants a full penalty waiver, providing businesses with the opportunity to correct past records transparently and without deliberate manipulation. Director Mokthar highlighted that this measure aims to give businesses a chance to rectify their records and support them in their digitalization efforts.
In an effort to support micro, small, and medium enterprises (MSMEs), LHDN has increased the exemption threshold from RM1 million to RM3 million. This adjustment allows businesses below the new threshold to qualify for an exemption. The LHDN also encourages these businesses to adopt e-invoicing voluntarily to speed up their digital transformation process.
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