FMM In The News: THE EDGE MALAYSIA, December 8, 2025
KUALA LUMPUR (Dec 8): The Federation of Malaysian Manufacturing (FMM) has proposed that the government adopt an automatic offset mechanism for tax overpayments — a move it says will ease financing pressures on companies while reducing the government’s cash outflow requirements.
In a statement on Monday, FMM said the mechanism would allow declared tax overpayments to be automatically applied to future tax liabilities. The federation also proposed a threshold-based approach, including automatic full refunds for overpayments below RM1 million.
“This would reduce the government’s need for large cash outflows for refunds while easing financing burdens on companies preparing for upcoming tax instalments,” it said.
The statement followed Prime Minister Datuk Seri Anwar Ibrahim’s announcement that the government has doubled the tax refund allocation to RM4 billion from RM2 billion to expedite outstanding payments to taxpayers.
Reiterating its long-standing call for predictable and transparent refund mechanisms, FMM urged the government to commit to processing refunds within 90-120 days after returns are filed and verified. If staggered payments are required, the Inland Revenue Board should communicate the schedule clearly, it said.
FMM also called for interest to be paid on refunds not settled within the statutory timeframe, as provided under Section 111D of the Income Tax Act, to enhance fairness and accountability.
Separately, FMM welcomed the government’s decision to raise the e-invoicing exemption threshold to RM1 million, saying it will help small SMEs that are struggling with low margins, limited staff, and tight cash flow.
Based on FMM’s internal assessments, about 85%-90% of its member companies fall under the phased e-invoicing implementation schedule.
While medium and large firms are generally prepared, micro and small enterprises have raised concerns about the significant costs and operational adjustments needed to comply.
For smaller SMEs, the transition involves more than switching invoice formats — it requires upgrading or purchasing compatible accounting software, integrating systems with the national e-invoicing platform, and training staff. These steps involve both upfront and recurring costs and add pressure to firms already dealing with rising operating expenses.
FMM said the higher RM1 million threshold provides “crucial breathing space” for micro and small businesses to digitalise at a manageable pace without disrupting operations or eroding margins. Thousands of the smallest SMEs will be able to continue operating without immediate system upgrades, allowing them to stabilise cash flow before transitioning.
However, the federation stressed that the raised threshold should be viewed as a temporary relief measure rather than a long-term substitute for digitalisation. It encouraged SMEs below the threshold to consider voluntary adoption when ready, noting that e-invoicing will eventually become a core component of Malaysia’s digital tax ecosystem.