In a statement, Wong said the Inland Revenue Board’s approach in rolling out the system fails to recognise the unique circumstances in Sabah as being distinct from those in Peninsular Malaysia.

Wong said imposing e-invoicing in Sabah without considering the severe internet connectivity issues and high cost of digital compliance tools could force many small businesses to shut down, mirroring the struggles faced in implementing the goods and services tax in the past.

“It is crucial for the government to take a sensitive approach to the implementation of e-invoicing in Sabah, ensuring that policies do not inadvertently stifle the very businesses they aim to support,” he said.

Wong, who is Tanjung Aru assemblyman, highlighted the critical need to improve basic infrastructure in the state, particularly internet access, before such digital policies are enforced.

He said if a postponement of the implementation of the e-invoicing for Sabah is not feasible, the threshold for mandatory e-invoicing should be raised to RM1 million for businesses in the state to better mirror the economic conditions and relieve excessive strain on small traders.

“By raising the e-invoicing threshold, Sabah’s small businesses would get breathing room to grow and adapt to digital transitions at a more manageable pace,” he added.

The e-invoicing system is being rolled out gradually, starting with businesses with an annual turnover or revenue of more than RM100 million on Aug 1, 2024. It will eventually extend to all businesses from July 1, 2025.

Currently, small traders who have annual sales of below RM150,000 do not need to issue e-invoices. However, the government is encouraging the involvement of small traders in the initiative in line with the country’s aspirations for digitisation of business activities.

On July 2, second finance minister Amir Hamzah Azizan announced that the government had agreed to allow micro, small and medium enterprises to issue consolidated e-invoices, which combine all sales transactions conducted for each month.

For traders who choose to develop their own systems or use technology providers, tax incentives have been provided, including the reduction of the capital allowance claim period from four years to three years for the purchase of computer equipment or software, effective from assessment year 2024.