Can Small Online Sellers Cope? The Harsh Reality Of E-Invoicing Compliance

While digital transformation is a key driver of economic progress, many micro-entrepreneurs and small traders face immediate challenges in adapting to the new system.

Credit: freepik

Subscribe to our FREE Newsletter, or Telegram and WhatsApp channels for the latest stories and updates.

As Malaysia moves towards mandatory e-invoicing, small businesses across the nation are grappling with a significant transition.

While digital transformation is a key driver of economic progress, many micro-entrepreneurs and small traders face immediate challenges in adapting to the new system.

To ease the shift, the government has exempted physical businesses with annual sales below RM150,000 from e-invoicing requirements.

However, this exemption does not extend to online sellers, regardless of their revenue size – a policy inconsistency that has sparked concern among industry groups and small business owners.

Consumer association raise red flags on policy disparities

Consumer Choice Centre (CCC) Malaysia has expressed strong concerns over the policy’s uneven treatment of small businesses.

CCC Malaysia country associate Tarmizi Anuwar pointed out that while small physical businesses under the revenue threshold are exempt, online sellers operating at the same scale are still required to comply.

The organisation argues that this creates unnecessary burdens for digital entrepreneurs, potentially raising costs for consumers and limiting market variety.

As a consumer association, we are deeply concerned that the current e-invoicing policy unfairly penalises small online sellers, many of whom are everyday Malaysians trying to earn an honest living. It is not reasonable that small physical shops are exempt, yet online businesses operating at the same scale are forced to bear additional compliance costs and administrative burdens.
CCC Malaysia country associate Tarmizi Anuwar.

CCC also noted that many online businesses already use digital payment systems that provide transaction records, making additional e-invoicing requirements redundant.

The organisation is calling for the government to extend exemptions to small online businesses to ensure fair competition and consumer affordability.

East Malaysian MSMEs face unique challenges

In Sarawak, the Pertubuhan Transformasi Dayak (TRADA) has highlighted the potential negative impact of mandatory e-invoicing on the state’s Micro, Small, and Medium Enterprises (MSMEs).

With over 50,000 online-based MSMEs in Sarawak, TRADA argues that the region’s digital landscape is vastly different from Peninsular Malaysia.

Many of these businesses are still in the early stages of digital adoption, struggling with limited funds, labor shortages, and technological barriers.

The additional burden of navigating e-invoicing complexities, TRADA warns, could push some businesses to reconsider their operations or even exit the market entirely.

The association stressed that enforcing e-invoicing on small online sellers could stifle growth and innovation—particularly at a time when the government is promoting digital economy expansion.

Both the federal government and state government must be cognisant of implementing policies that would have a negative impact on people’s livelihoods, especially within less well-off communities in Malaysia.
TRADA President Joseph Janting.

Online sellers struggle with compliance costs

For small online sellers like Zul, a local car accessory business representative, the new requirements introduce additional complexity and financial strain.

He explained that higher compliance costs could squeeze profit margins or even lead to increased prices for consumers.

His primary concern lies with his network of small-scale distributors, many of whom lack the necessary resources, manpower, or technical expertise to comply with e-invoicing regulations.

If compliance costs become too burdensome, some of these distributors may be forced to shut down, he warned.

It’s a pity because these small distributors are the backbone of our business. On this note, I urge the government to consider exemptions or provide more flexibility to small online businesses, thus ensuring that regulations do not inadvertently push them out of the market.

While the government’s push for digital compliance is part of Malaysia’s broader economic modernisation strategy, concerns remain about its uneven impact on small businesses.

Industry groups and entrepreneurs are calling for a more balanced approach, one that ensures regulatory fairness while supporting the growth of both physical and digital small businesses.

Whether policymakers will heed these concerns remains to be seen.

Share your thoughts with us via TRP’s Facebook, Twitter, Instagram, or Threads.