KUALA LUMPUR, Dec 8 — The e-invoicing exemption threshold, which has been raised from RM500,000 to RM1 million, will provide businesses greater clarity to plan while easing immediate compliance-related burdens, said the Federation of Malaysian Manufacturing (FMM, formerly known as Federation of Malaysian Manufacturers).

Newly elected president Jacob Lee Chor Kok also said the government’s decision to double the allocation for tax refunds to RM4 billion from RM2 billion in December will help expedite outstanding payments and offer critical liquidity support.

“These timely and strategic measures provide meaningful relief to the smallest segment of small and medium-sized enterprises (SMEs), many of whom continue to operate with thin margins, limited administrative capacity, and ongoing cash-flow pressures due to rising operating costs and tighter financing conditions.

“This will reduce financial stress across the manufacturing and SME sectors,” he said in a statement today in response to Prime Minister Datuk Seri Anwar Ibrahim’s recent announcement regarding the exercise to ease the burden of SMEs ahead of the Jan 1, 2026 rollout.

The statement said raising the exemption threshold will provide breathing space for micro and small businesses to digitalise at a suitable and manageable pace, while timely tax refunds are crucial because businesses operate on credit terms and face significant outstanding receivables, but pay taxes upfront before receiving actual income.

To further streamline the tax refund processes, Lee said FMM has proposed adopting a threshold-based approach, such as granting automatic full refunds for overpayments below RM1 million, to reduce administrative burdens for both taxpayers and the Inland Revenue Board.

“We also strongly encourage the implementation of an automatic offset mechanism, whereby declared tax overpayments are automatically applied to future tax liabilities.

“This would reduce the government’s need for large cash outflows for refunds while easing financing burdens on companies preparing for upcoming tax instalments,” he said.

Overall, Lee said the government’s decisions will help stabilise business cash flow, strengthen compliance readiness, and promote a smoother transition into Malaysia’s evolving digital tax ecosystem. — Bernama