Reimagining SME Tax Compliance in the Digital Era: A Conceptual Framework for E-Invoicing Implementation in Malaysia

Malaysia’s mandatory e-Invoicing implementation by the Inland Revenue Board of Malaysia (IRBM) represents a critical digital tax reform designed to optimize revenue collection and minimize transaction under-reporting. While providing systemic upgrade paths, this transition creates distinct hurdles for resource-constrained Small and Medium Enterprises (SMEs). This paper establishes a conceptual framework examining the dual-track digital architecture—balancing mandatory continuous transaction control via the MyInvois portal with commercial document exchange via Peppol. It systematically evaluates the multi-dimensional impact of e-Invoicing on SMEs, identifying major barriers including steep financial costs, low technological readiness, operational workflow disruption, and heightened cybersecurity vulnerabilities driven by rising digital threats. To ensure a smoother transition, the study outlines a structured implementation pathway. Key strategic recommendations mandate proactive organizational gap assessments, rigorous data cleansing, robust cross-departmental training, and the strict enforcement of baseline cybersecurity discipline. Ultimately, this paper underscores that successful digital tax transformation relies on a collaborative ecosystem, demanding targeted, sector-specific government guidance alongside affordable accredited software to bridge the technology gap for Malaysian small businesses.