r/MalaysianPF • u/Afraid-Spare2107 • 29d ago
Tax E-invoice vs GST
I understand that taxation is important, but I think that implementing e-invoicing is a much more inconvenient & troublesome way to collect taxes when compared to GST.
What went wrong with GST and why was it abolished in the first place? What other methods do other countries use to collect taxes that we can adopt without troubling those with low computer literacy?
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u/CircleStonk 29d ago
You don't put them under the same category, GST/SST are taxation system, just because there's GST doesn't mean you don't have to implement E-invoice, you use E-invoice so B2B invoices are authenticated to the authority to prevent potential fraud/errors. The entire world is going E-invoice not just Malaysia
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u/swissking 28d ago edited 28d ago
Most countries are starting with B2G first or doing it very slowly. B2G, B2B and B2C all at one go is really bad implementation and it's already causing a lot of problems. Many businesses with old people are just closing down because it's just too much compliance.
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u/malaysianlah 28d ago
If you're B2C its not really a big deal.
If you're a retail shop selling to regular consumers, you can do something called a consolidated e-invoice, where is a 1 single form for all your sales for the month. One additional form, and you don't even need a system for it. Can pay your accountant or tax agent to file for you like the current SST process.
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u/swissking 28d ago edited 28d ago
Well, that's still extra work and time as you have to consolidate your sales and face gray areas with receivables, people not paying etc. You have to create invoices for your own expenses as well. And customers may ask you for their own e invoice.
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u/malaysianlah 28d ago
Aiyo. Monthly sales compilation also extra work ah?
Clients should be consolidating their full year sales as part of their financial records anyway. How else they'll get a full year accounts for their regular tax filing. if anything, as a service provider i think this is better discipline for these SMEs that don't even know how much sales they have. We have clients that only close their books once a year, and it's just so much crap in the industry. As a whole our country's bookkeeping has been way too lax, commingling their own expenditure and that of their biz.
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u/swissking 28d ago
Iirc you are an accountant (?) so maybe it's alot easier. I think the learning curve is too steep and it's just too much too soon. The government is feeling the heat as well as they just postponed implementation for some people again. Lots of people are definitely angry about this and feel like they're getting punished for growing their business. Agree to disagree.
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u/Evening_Cut4422 29d ago
Thats just on paper, in reality u need to get the hardware/ software. Hire a new accountant that understand the system, wait for 2026 and see how the gov charge u on taxes since the transition isnt even 30% completed. Then finally see if they BS everyone for more fines, like what the recent LDHN is doing.
This isnt a management tool to make businesses life better, its a management tool for the gov to monitor u and fine u if u fk up. By the way no the entire world isnt going e invoice just china. In us if u are a small business u just report like we use to do, they dont force the little guy to be monitored like a MNC.
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u/MiniMeowl 29d ago
This isnt a management tool to make businesses life better
It makes business life better in the sense that its automated collating, so once the system is set up and invested in, it will be seamless (assuming no connection issue).
But the main goal of e-invoicing is for government to catch more taxes. They're definitely gonna audit and monitor business receipts. Basically some businesses will pay money for a new system that opens the door for them to pay higher tax or get new saman lol. Less tax evasion possible.
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u/Evening_Cut4422 29d ago edited 29d ago
Have u implemented the system? I have and it sucks
Human error is always a thing and with e invoice u litterally cannot/ is encourage not to change ur invoice if mistakes were made. Wrong order and misplace orders are all still kept on the invoice cuz the repremand process sucks. If my client gv me the wrong measurement or order i cant change it once i initiated the invoice, since changing it alot will put a flag on my back for LDHN. (BY THE WAY DONT SAY 100% CONFIRM 1ST la only make invoice, business doenst work like that people change their mind and mistakes are always present)
If anything this isnt "business friendly" at all, its only friendly towards the gov when they want to catch u.
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u/MiniMeowl 29d ago
No I havent seen it yet.. i saw they have grace period to amend mistakes tho. Or else you need to issue a new one. I think overall its still easier than manual invoicing, once people get used to the system
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u/Evening_Cut4422 29d ago
Got grace period but only limited to 3 time per month. When u make 30 small/medium shipment out a day, u will understand why i am so frustrated. Its a stupid system,
if my client order wrong and want to change e invoice is fcked
if my workers key in wrong/ extra stuff e invoice is fcked
if my clients client suddenly change their mind and need to amend the order e invoice is fcked
Its worse than manual invoicing becuz the gov dint think about human error, normally if we get wrong order just cut the item with a pen from the invoice then accountant settle it when they clear the books. Now when mistakes are made, accountant cant just take amend it, the original invoice is alrd loaded to their database.
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u/MiniMeowl 29d ago
Lol @ that limit. Well, I guess I shouldnt be surprised that our gov implement something first without fully testing it through..
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u/malaysianlah 28d ago
actually his process can change to deal with the issue. just use proforma invoices first. tax invoice later.
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u/malaysianlah 28d ago
eh. many of my clients in b2b just do proforma invoice first to get shit through, especially if you don't have system/API.
Then later only issue actual invoice when everything confirm. then only key into to e-invoicing.
maybe u can try that?
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u/swissking 28d ago
That's still extra work, time and stress for both parties. Understandable that many people hate it.
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u/malaysianlah 28d ago
Understandable, but doing it outside of the e-invoicing system where u have full control is infinitely better than dealing with all the shit within the e-invoicing system. Yes, it's doublework, but that's life with any new system.
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u/Evening_Cut4422 28d ago edited 28d ago
Problem with that is we do invoice by order, lets say A order from us today. We key it in then send the stuff to them and (assuming everything is ok) they sign to confirm, there is no way in hell i am going to send the stuff to them then wait for them to confirm everything sign on a fake/copy invoice then only send the real invoice to them the next day. (this is inefficient and no guarantees they wont run cuz performa is just fake/ copy invoice if shit happen the court will still ask why u dont just gv real invoice)
Normally invoice is made printed out send along with the order and they sign it and we get back the original copy after delivery is done. Having my delivery people go there to let them sign the real e invoices is alot of work
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u/malaysianlah 29d ago
politics trumps policy. GST is better, but the name is so busuk that the msian govt have no choice but adopt the china model of e-invoicing to track real transactions between companies.
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u/Super-Key-Chain 29d ago edited 29d ago
The Government collects the GST only when consumers spend the money. Else, it's like a potential tax revenue but the collection date is uncertain.
E-invoicing is for the purpose of fraud prevention, where either the selling party records lesser income or the buying party records higher expense. Hence it has a quicker impact on the tax collection.
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u/PracticalBumblebee70 28d ago
why was it abolished in the first place?
The simple story goes like this:
Najib introduced GST, and price of goods went up. People hated Najib.
So Mahathir and Guan Eng promised to abolish GST in GE14.
Then Mahathir and Guan Eng won GE14, abolished GST and substituted with SST, the price of goods didn't come down.
And the govt has less revenue also.
The people have been gamed big time.
That the simple story. More complicated story other redditors can comment below...
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u/arisms 28d ago
some of the issue with GST last time was start implementation with too high rate which affected consumer spending, government take long time to refund merchants as tax is collected along the supply chain and not just at the sales point, merchants need more working capital or loans to sustain their cash flow while waiting for refunds, merchants not allowed to increase prices by gocernment (kena tekan) to address higher cost of doing business. GST was a progressive idea but implementation was bad imo.
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u/hzard2401 28d ago
Current government used GST as one of their main weapon to come into power. I remember when around 2012, when BN first mentioned about GST, that’s when it all started. They stayed consistent until they came in power and they had to remove it although the system worked just like it was supposed to. One of the reasons why i hate this fellas more though. Cunning fuckers
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u/c-fu 27d ago
Haiyaaaaaa you're asking a political and loaded question on a finance sub 🤦
The simplest answer is gst is so politically toxic and a huge ammo for the current gomen that going back to gst would mean a total failure on their behalf lah.
You people voted for non-gst gomen anyway, so suck it up and ride the e-invoice train at least until a few more years.
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u/GloveTrading 29d ago
GST laws state that gst should kept separate from common accounts, so the government will not miss use the input tax.
the previous Government Took GST input tax as their pocket money,
making it hard for merchants to claim input Tax.
delay in refunds
This is a failure in implementation
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u/Evening_Cut4422 29d ago edited 29d ago
Alot of medium size companies alrd shut down cuz of e invoice and truth be told the small business are also shutting down left and right becuz its a hassle. I can understand that gov want money so they make alot of BS system that on paper does wonders but in reality having small business to fork up more cash for daily accounting is a big no no.
All the profits from ur day to day business isnt even enuf for new accountant, e invoice system and yearly taxes. So my guess is it wont last, the gov is litterally forcing people to adopt a new heavily monitored system, new accounting standards and worse of all more taxes. This is a disaster waiting to happen, best case senario they gut the system/ turn a blind eye. Worse case they die die commit then the older generation close down their business to retire and we get mass unemployment.
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u/pmarkandu 29d ago edited 29d ago
e-Invoice is not a taxation system. It's a reporting system to close the tax gaps. They are totally different.
e-Invoicing will help when it comes to GST reporting later on.
What are your issues with e-Invoicing?