PUTRAJAYA: The Inland Revenue Board (IRB) has recently identified 66,000 businesses operating on e-commerce platforms as lacking compliance with the estimated tax installment payments mandated by the Income Tax Act 1967. This concerning development came to light through the analysis of e-invoices submitted by these businesses since August 1, 2024.
According to the IRB, the findings indicated no records of income tax return forms submitted by these identified businesses. "The 66,000 businesses have issued a total of four million e-invoices," the IRB stated. This lack of compliance not only signifies underreporting of income but also raises alarms about potential revenue losses for the government.
The IRB urged these businesses to regularly update their tax records to avoid any enforcement actions. "With the implementation of e-invoicing, the IRB actively monitors taxpayer data verified through the MyInviois system to uphold principles of fairness within the country’s taxation policies," the agency commented.
Encouragingly, there has been notable engagement from businesses involved with the e-invoicing system. The IRB reported issuing approximately 196 million e-invoices as of March 3, 2025, which highlights the growing acceptance among taxpayers to comply with the new system. This significant figure reflects participation from the first, second, and third phases of e-invoicing implementation.
"This indicates a positive level of acceptance among taxpayers in complying with the e-invoicing system," the IRB underscored. It also noted the grace period for Phase One taxpayers ended on January 31, 2025, and these entities must now fully adhere to the e-invoicing requirements as outlined by the guidelines effective February 1, 2025.
The IRB's initiative to enforce stringent monitoring of tax submissions through e-invoices aims to adjust the archaic tax collection methods historically employed. With the challenges posed by the rapidly growing e-commerce market, the IRB is adapting by leveraging technology to streamline tax reporting and collection processes, thereby improving compliance rates overall.
The call to action from the IRB serves as both a warning and guidance for the businesses involved, as the consequences of non-compliance can be severe. These could include penalties, increased scrutiny, and potential legal actions which could jeopardize the future viability of the businesses.
Conclusion: The emphasis on e-invoicing as a mechanism for tax compliance signifies the IRB's commitment to reforming the tax collection process as it adapts to modern commerce. Continuous efforts must now focus on educating e-commerce businesses about their tax obligations and the importance of compliance for the overall economic health of the country.