Determinants of tax compliance in Asia: A case of Malaysia

Mohd Rizal Palil, Ahmad Fariq Mustapha

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

Since tax systems were introduced in Asia several centuries ago, the determinants of tax compliance were different among countries. This paper attempts to reveal the determinants of tax compliance in Malaysia in a self assessment system. The objective of this study is to identify the determinants of tax compliance when a new tax system is introduced called Self Assessment System (SAS). Nine tax compliance determinants were examined namely probability of being audited, perception of government spending, perception of equity and fairness, penalty, financial constraint, changes to current government policies, referral group, the role of the tax authority and tax knowledge. From a survey of 1073 respondents, the results suggested that tax knowledge has a significant impact on tax compliance even though the level of tax knowledge varies significantly among respondents. The results also indicate that tax compliance is influenced specifically by probability of being audited, perceptions of government spending, penalties, personal financial constraints, and the influence of referent groups. The results of this study can inform policymakers in what ways the determinants can affect compliance. It also provides an indicator for tax administrators of the relative importance of tax knowledge in assisting with the design of tax education programmes, simplifying tax systems and developing a wider understanding of taxpayers' behaviour.

Original languageEnglish
Pages (from-to)7-32
Number of pages26
JournalEuropean Journal of Social Sciences
Volume24
Issue number1
Publication statusPublished - Sep 2011

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taxes
Malaysia
determinants
tax system
self-assessment
penalty
fairness
government policy
equity
Group

Keywords

  • Malaysia
  • Self assessment system
  • Tax compliance

ASJC Scopus subject areas

  • Social Sciences(all)

Cite this

Determinants of tax compliance in Asia : A case of Malaysia. / Palil, Mohd Rizal; Mustapha, Ahmad Fariq.

In: European Journal of Social Sciences, Vol. 24, No. 1, 09.2011, p. 7-32.

Research output: Contribution to journalArticle

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