LHDN E-Invoice is not a new tax system, it is a tax reform. It plays a vital role in combating tax evasion by establishing more accurate and transparent records of financial transactions. This increased transparency makes it harder for businesses to evade taxes.
AI cloud accounting software platform business coach Luo Weixiong pointed out: “In the era of consumption tax (GST), only enterprises with an annual income of RM500,000 and above need to register for consumption tax. But in the era of electronic invoices, all enterprises must comply, which covers several Millions of businesses.”
“The government has brought forward the implementation timetable from 2027 to July 1, 2025, which only leaves us with 18 months. This will increase the need for compliance in a short period of time and if businesses only prepare at the last minute , I can foresee that some businesses will be lagging behind due to the inability to obtain assistance from accounting firms, especially those who are still using desktop accounting software (Windows Based Accounting Software) that needs to be upgraded and installed one by one.”
Shen Wenlong, the founder of the AI cloud accounting software platform, is a consumption tax lecturer. He has given many national lectures on consumption tax in the consumption tax era in Malaysia, especially the tax code knowledge in consumption tax accounting software. He said: ” Those businesses that can cope with the challenges will survive and perform better in the era of electronic invoices, because after implementation, the threshold for starting a business will be higher and competition will be reduced. Many small and medium-sized enterprise owners usually outsource their accounting work to accounting firms, These accounting firms typically prepare accounting accounts only once a year.”
For example, before submitting tax returns to the Inland Revenue Department of Malaysia (LHDN), they usually consult their accountants about how much profit they should declare and how much tax they want to pay. Merchants usually say to the accounting firm: “I want to pay this year.” How much tax is it? Can you help me adjust it?”
In this regard, accounting firms usually make some very creative adjustments, including sales, costs and expenses.
“In the era of e-invoicing, things are changing. Merchants are now required to submit your invoices to the Inland Revenue Board on a daily or at the latest monthly basis. This means sales are no longer easily manipulated and the Board will be able to track the merchants’ monthly sales, costs and expenses.”
Profit is sales minus costs and expenses, which means that the Internal Revenue Service also knows the merchant’s monthly profit. If the merchant does an accounting once a year, at the end of the year, the accounting firm can easily recommend that the merchant save more taxes and Adjust the accounts?
3 key points tell you why it is important to do an account every month:
1. Electronic invoices cannot be Backdated. Your costs occurred in February, and your electronic invoice should be in February. For example, if you paid a commission to the agent in February, you need to issue a Self-Billed E-Invoice in February, not December.
2. If merchants want to deduct taxes on their costs and expenses, they need to get electronic invoices every month.
3. Maybe you might say that merchants have a way to get electronic invoices at the end of the year, but what if the electronic invoice dates for most costs and expenses are at the end of the year? Just imagine, if you have good profits every month, but then turn into losses in December, this will lead to an increased risk of tax audit.
■ What challenges do small or micro merchants face doing monthly accounts?
Sim Wenlong revealed: “Businesses may face three main challenges. First, doing accounts once a month requires experienced accountants. If in-house accountants are hired to handle complete accounts, the salary will be at least several thousand ringgit a month. For It’s a big burden for small businesses!”
“Secondly, if you want to save money and handle complete accounts yourself, but do not have this knowledge, you will eventually need to seek help from an accounting firm; thirdly, in the era of electronic invoices, we predict that the need to do accounts once a month will greatly increase This has caused accounting firms to be in short supply and unable to handle the huge workload.”
He said: “Therefore, merchants should make good use of artificial intelligence (AI) and cloud computing technology (Cloud Computing) to cooperate with accounting firms to handle accounts. In this way, accounting firms can save a lot of time, and merchants can handle accounts in this way. You can also avoid making mistakes that result in paying more tax.”
■ What challenges will accounting firms face?
Currently, most accounting firms still use desktop accounting software. Therefore, Shen Wenlong believes that accounting firms may face four major challenges:
1) Since there is no online connection between the software used by the merchant and the accounting firm, the merchant uses its software to issue electronic invoices, and the accounting firm repeatedly inputs information, which wastes a lot of time;
2) The electronic invoice policy will be updated from time to time, and most of the time the software also needs to be updated. If the accounting firm has 100 company accounts, then it must be upgraded 100 times. If the policy changes three times a year, then it must be upgraded together with the software supplier. 300 times, which is a very time-consuming task;
3) Risk of data inconsistency. Some Windows-based accounting software may allow users to export and import data. However, if only one party unilaterally updates the software to the latest version, accounting firms importing data from different versions may cause greater problems;
4) There is a common misunderstanding. Many people believe that in the era of electronic invoices, if the buyer cannot provide the necessary information, such as TIN, address, contact number email, etc., then there is no need to issue an invoice. This is not correct. We are still obliged to issue an ordinary invoice to the buyer, and the buyer may reserve the right to apply for an electronic invoice based on the ordinary invoice.
Therefore, a best practice is to include a QR code on regular invoices. After scanning this QR code, the buyer will be directed to the web portal provided by the accounting software. There, they can enter all required e-invoice information and request a verified e-invoice directly from LHDN.
Since the Windows Based Accounting Software is not cloud-based and is not always online, enabling the buyer to scan the QR code, extract data from the software, and submit the invoice to request verification of the electronic invoice for online processing becomes challenging if insisting on passing Handling such processes with Windows Based Accounting Software can lead to many complications. Accounting firms should take advantage of this moment to transform and use the latest technologies, such as AI and Cloud Solution cloud technology, to help merchants handle their accounts.
■ How can we help?
QNE works with a group of certified accounting firms, with both parties sharing a fee, to reduce the cost of electronic invoicing compliance for their clients, especially small and medium-sized business owners.
Luo Weixiong pointed out: “Through this partnership, certified accountants can enable their clients to use our AI cloud accounting platform to perform various tasks such as online invoicing, receipts, refunds and online payment collection. Accountants can access it at any time their customer data to prepare monthly accounting reports, comply with e-invoicing regulations, and employ legal strategies to reduce tax liabilities.”
The QNE AI Cloud Accounting platform has a built-in OCR function that allows users to convert images into data, which greatly saves accountants’ time in entering data. Merchants only need to take photos and upload their files to our platform. In just a few seconds, images are smoothly converted into accurate accounting data.
Also, businesses generally don’t want to take the time to learn how to use accounting software. Merchants don’t have to worry about this, we provide free AI chatbots to accounting firm clients. Merchants can communicate with the AI robot on their mobile phones anytime and anywhere to obtain certain key financial information, such as this month’s sales and profits, or today’s bank deposits, etc. The chatbot will reply to the merchant immediately. In the past, merchants had to wait until the end of the year to know the real information. sales and profits. Now that merchants can grasp key financial information anytime and anywhere, I believe merchants will appreciate and like to cooperate with such accounting firms.
He said: “Businesses should not just pursue profits. As Jack Ma said, ‘The biggest problem you can solve, the higher your profits will be!’ I very much agree with this view. Altruistic thinking is very important. Businesses need us most. When the focus is on solving problems, profits will surely follow.”
If the accounting firm recognizes our concept, we sincerely invite you to discuss cooperation. If we can help merchants during this challenging time, we are guaranteed to be able to accumulate a large customer base.
