Deputy finance minister Ahmad Maslan said these two methods are to replace the goods and services tax (GST) as an option to tackle the shadow economy.

The shadow economy is largely formed by non-registered businesses, the under-reporting of business income, unreported sources of income, and illicit trafficking.

“How do we reduce the size of the shadow economy? We do it by introducing e-invoice, as announced under Budget 2024.

“We know the implementation of GST can reduce 10% of the shadow economy but we don’t think there will be GST this year or next year,” he told reporters after launching the Kocek coin exchange service today.

He said the implementation of e-invoicing is a new mechanism to improve the efficiency of the country’s tax administration and, in turn, enhance tax compliance.

Ahmad said from 2000 to 2009, the estimated size of the shadow economy was 30.2% of gross domestic product (GDP).

However, he said from 2010 to 2019, the size of the shadow economy was reduced to 21.2% due to the implementation of GST from 2015 to 2018.

According to an EY report last November, it is estimated the shadow economy in Malaysia accounted for 18% of GDP in 2019. In today’s terms, this roughly translates to RM250 billion.

Meanwhile, Pertama Digital Bhd expanded its Kocek service through a strategic partnership with Pos Malaysia Bhd, allowing Kocek to offer its coin exchange services at Pos Malaysia branches nationwide.

The company initiated the Kocek service to stimulate the circulation of unused coins among Malaysians.

Ahmad said the annual coins production by Bank Negara Malaysia from 2019 to 2022 was 800 million pieces at an estimated cost of RM64 million per year.

He added that nearly 30% or 240 million pieces of coins from the annual production did not return to circulation with an estimated cost of RM20 million per year being “wasted”.