The Inland Revenue Department outlined plans for a mandatory digital point-of-sale system to track VAT transactions, but a parliamentary committee raised concerns about technical readiness, timeline feasibility, and the system's capacity to reach informal economy segments.
The Inland Revenue Department has indicated it cannot issue the required regulatory notification for its digital point-of-sale initiative until receiving technical specifications from the Digital Economy Ministry. Following formal approval, VAT-registered businesses would face a three-month compliance window to acquire POS equipment and transition to electronic invoicing. However, members of the Committee on Public Finance questioned whether the underlying infrastructure could support such an accelerated timeline.
The IRD's current strategy involves phased implementation beginning with low-volume pilots before scaling toward a comprehensive electronic invoicing system. Department officials stated they expected to onboard all taxpayers over approximately two years, working in conjunction with the Digital Economy Ministry and state technology body GovTech. Initial onboarding has included 15 apparel manufacturers, five tea exporters, and 380 tea-producing entities, with work underway to connect wholesale, retail, and additional export-oriented companies. However, committee members questioned why the initiative proceeded through selected sectors rather than leveraging the existing base of 36,656 registered VAT taxpayers.
Parliamentary scrutiny exposed several unresolved technical and practical obstacles. Members pressed officials on how the system would function across businesses with varying technological sophistication, particularly those lacking enterprise resource planning systems or reliable connectivity. The committee stressed concerns about cost burdens on smaller enterprises, noting that compliance expenses could disproportionately affect them. Officials acknowledged these challenges and indicated that concessions, potentially including tax treatment for equipment acquisition, remained under discussion but no final incentive structure was presented.
The committee also highlighted gaps in private sector readiness. Officials indicated that software and POS providers would require substantial lead time to integrate their products with IRD requirements, warning that vendor delays could become implementation bottlenecks. Additionally, security infrastructure, offline transaction capability during connectivity failures, and cybersecurity protocols remain incompletely addressed. Members urged authorities to expand stakeholder consultations beyond larger taxpayers to include small retailers and their associations, and to implement a comprehensive public awareness campaign before any mandatory rollout.
