GEORGE TOWN: 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.
Inland Revenue Board (LHDN) CEO Nizom Sairi said the new system will cut down the burden of record-keeping on taxpayers as they would no longer have to keep physical copies of receipts, invoices and other proof of payment for seven years, as currently required.
All e-invoices will be stored in LHDN’s system, with soft copies available to be downloaded anytime. All that is required is for taxpayers to verify the pre-filled data.
“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 pre-filled 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.
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.
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.
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.