Compliance costs of goods and services tax (GST) among small and medium enterprises

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

Taxation is one of the most important instruments in generating revenue for a country. History has shown that many countries develop based on tax revenue. Tax-based spending, also known as Goods and Services Tax (GST) or Value Added Tax (VAT) is a consumerism tax posed upon sales of goods and services. It is a potential tax instrument introduced by the Malaysian government in order to broaden and increase tax collection. The implementation of GST in Malaysia is a unique case in which it will replace service and sales taxes. The introduction of GST has had people from all walks of life, from academicians, professionals to the people (taxpayers), debating about the effect of increasing price and decreasing sales and services tax. The Malaysian government expects the GST to minimise individual and corporate tax rates in order to reduce tax liabilities in both entities. Small and medium enterprises (SMEs) are among the focal point of discussion related to the compliance cost of GST. The compliance cost of SMEs is expected to increase as soon as GST is implemented. As the profit of SMEs is relatively low, would they be able to adopt the initial compliance costs of GST efficiently at the time of its implementation? If the SMEs are receptive towards GST, how much are the compliance costs through new development of software system, training of human resources and new accounting system? The International Monetary Fund (IMF) believed that the Malaysian tax system could be enhanced (increased tax collection) by introducing GST. There are two main objectives of this study; first is to identify the compliance costs of SMEs in fulfilling their tax obligations; and second to investigate the expected costs and readiness of these companies in the implementation of GST. In achieving these two objectives, the data were collected from SMEs by using structured questionnaires. This study is significant as it estimates the compliance costs among SMEs as well as outlining recommendations and suggestions to tax administrators so that they could consider the tax liability and compliance cost in their daily operation.

Original languageEnglish
JournalJurnal Pengurusan
Volume45
Publication statusPublished - 2015

Fingerprint

Tax
Compliance costs
Small and medium-sized enterprises
Liability
Tax collection
Government
Tax revenues
Tax system
Systems software
Obligation
Profit
Accounting systems
Revenue
Taxation
Value added tax
Costs
Sales tax
Malaysia
Consumerism
Corporate tax rates

Keywords

  • Compliance costs
  • Goods and services taxes (GST)
  • Malaysia
  • Small and medium enterprises

ASJC Scopus subject areas

  • Business, Management and Accounting (miscellaneous)
  • Accounting
  • Business and International Management

Cite this

@article{de802951eed747fbb6c946ea28540e67,
title = "Compliance costs of goods and services tax (GST) among small and medium enterprises",
abstract = "Taxation is one of the most important instruments in generating revenue for a country. History has shown that many countries develop based on tax revenue. Tax-based spending, also known as Goods and Services Tax (GST) or Value Added Tax (VAT) is a consumerism tax posed upon sales of goods and services. It is a potential tax instrument introduced by the Malaysian government in order to broaden and increase tax collection. The implementation of GST in Malaysia is a unique case in which it will replace service and sales taxes. The introduction of GST has had people from all walks of life, from academicians, professionals to the people (taxpayers), debating about the effect of increasing price and decreasing sales and services tax. The Malaysian government expects the GST to minimise individual and corporate tax rates in order to reduce tax liabilities in both entities. Small and medium enterprises (SMEs) are among the focal point of discussion related to the compliance cost of GST. The compliance cost of SMEs is expected to increase as soon as GST is implemented. As the profit of SMEs is relatively low, would they be able to adopt the initial compliance costs of GST efficiently at the time of its implementation? If the SMEs are receptive towards GST, how much are the compliance costs through new development of software system, training of human resources and new accounting system? The International Monetary Fund (IMF) believed that the Malaysian tax system could be enhanced (increased tax collection) by introducing GST. There are two main objectives of this study; first is to identify the compliance costs of SMEs in fulfilling their tax obligations; and second to investigate the expected costs and readiness of these companies in the implementation of GST. In achieving these two objectives, the data were collected from SMEs by using structured questionnaires. This study is significant as it estimates the compliance costs among SMEs as well as outlining recommendations and suggestions to tax administrators so that they could consider the tax liability and compliance cost in their daily operation.",
keywords = "Compliance costs, Goods and services taxes (GST), Malaysia, Small and medium enterprises",
author = "Rosiati Ramli and Palil, {Mohd Rizal} and {Abu Hassan}, {Norul Syuhada} and Mustapha, {Ahmad Fariq}",
year = "2015",
language = "English",
volume = "45",
journal = "Jurnal Pengurusan",
issn = "0127-2713",
publisher = "Penerbit Universiti Kebangsaan Malaysia",

}

TY - JOUR

T1 - Compliance costs of goods and services tax (GST) among small and medium enterprises

AU - Ramli, Rosiati

AU - Palil, Mohd Rizal

AU - Abu Hassan, Norul Syuhada

AU - Mustapha, Ahmad Fariq

PY - 2015

Y1 - 2015

N2 - Taxation is one of the most important instruments in generating revenue for a country. History has shown that many countries develop based on tax revenue. Tax-based spending, also known as Goods and Services Tax (GST) or Value Added Tax (VAT) is a consumerism tax posed upon sales of goods and services. It is a potential tax instrument introduced by the Malaysian government in order to broaden and increase tax collection. The implementation of GST in Malaysia is a unique case in which it will replace service and sales taxes. The introduction of GST has had people from all walks of life, from academicians, professionals to the people (taxpayers), debating about the effect of increasing price and decreasing sales and services tax. The Malaysian government expects the GST to minimise individual and corporate tax rates in order to reduce tax liabilities in both entities. Small and medium enterprises (SMEs) are among the focal point of discussion related to the compliance cost of GST. The compliance cost of SMEs is expected to increase as soon as GST is implemented. As the profit of SMEs is relatively low, would they be able to adopt the initial compliance costs of GST efficiently at the time of its implementation? If the SMEs are receptive towards GST, how much are the compliance costs through new development of software system, training of human resources and new accounting system? The International Monetary Fund (IMF) believed that the Malaysian tax system could be enhanced (increased tax collection) by introducing GST. There are two main objectives of this study; first is to identify the compliance costs of SMEs in fulfilling their tax obligations; and second to investigate the expected costs and readiness of these companies in the implementation of GST. In achieving these two objectives, the data were collected from SMEs by using structured questionnaires. This study is significant as it estimates the compliance costs among SMEs as well as outlining recommendations and suggestions to tax administrators so that they could consider the tax liability and compliance cost in their daily operation.

AB - Taxation is one of the most important instruments in generating revenue for a country. History has shown that many countries develop based on tax revenue. Tax-based spending, also known as Goods and Services Tax (GST) or Value Added Tax (VAT) is a consumerism tax posed upon sales of goods and services. It is a potential tax instrument introduced by the Malaysian government in order to broaden and increase tax collection. The implementation of GST in Malaysia is a unique case in which it will replace service and sales taxes. The introduction of GST has had people from all walks of life, from academicians, professionals to the people (taxpayers), debating about the effect of increasing price and decreasing sales and services tax. The Malaysian government expects the GST to minimise individual and corporate tax rates in order to reduce tax liabilities in both entities. Small and medium enterprises (SMEs) are among the focal point of discussion related to the compliance cost of GST. The compliance cost of SMEs is expected to increase as soon as GST is implemented. As the profit of SMEs is relatively low, would they be able to adopt the initial compliance costs of GST efficiently at the time of its implementation? If the SMEs are receptive towards GST, how much are the compliance costs through new development of software system, training of human resources and new accounting system? The International Monetary Fund (IMF) believed that the Malaysian tax system could be enhanced (increased tax collection) by introducing GST. There are two main objectives of this study; first is to identify the compliance costs of SMEs in fulfilling their tax obligations; and second to investigate the expected costs and readiness of these companies in the implementation of GST. In achieving these two objectives, the data were collected from SMEs by using structured questionnaires. This study is significant as it estimates the compliance costs among SMEs as well as outlining recommendations and suggestions to tax administrators so that they could consider the tax liability and compliance cost in their daily operation.

KW - Compliance costs

KW - Goods and services taxes (GST)

KW - Malaysia

KW - Small and medium enterprises

UR - http://www.scopus.com/inward/record.url?scp=84959272776&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84959272776&partnerID=8YFLogxK

M3 - Article

AN - SCOPUS:84959272776

VL - 45

JO - Jurnal Pengurusan

JF - Jurnal Pengurusan

SN - 0127-2713

ER -