Individual Perceptions And Compliance Behaviour Under The Prevailing Tax Climate In Malaysia

by Asst. prof. Dr. K-Rine Chong, Prof. Dr. Ramasamy Ravindran and Prof. Dr. Barjoyai Badai

National Research & Innovation Conference for Graduate Students In Social Sciences (2014)


While some scholars advocate that majority are indeed honest in paying taxes, tax gap unfortunately remains as an alarming issue to be rectified throughout the world including Malaysia. Debates pertinent to cutting a clear border in between evasion and avoidance seem to be crucial, yet compliance outcome is fundamentally affected by behavioural intentions. It is interesting to uncover if there are any differences in perceptions and tax compliance behaviour among reference groups of gender, marriage status, quota groups, age, and ethnicity. Survey questionnaires were distributed to Malaysian citizens with quota sampling design in three sub-groups: Self employed, employed and university students.

With 340 usable responses, univariate analysis was conducted and it was found that, respondents generally perceive power of tax authorities and enforced compliance behaviour in similar ways. On the other hand, males, married persons and Bumiputra are more aware on tax matters and express more trust in tax authorities; whereas married persons and older age group perceive higher tax morale. Interestingly, students trust more in government than employed group, followed by self-employed group, but they are with highest conditional cooperation behaviour and lowest tax awareness.

Results imply that self-employed or business owners are aware of the consequences of non-compliance and are more sensible in fulfilling their own tax obligations, even though they may not trust the government is allocating tax collections in the right way they perceive. Conversely, students would have fulfilled their obligations conditionally according to their peers‘ actions, perhaps due to the lack of awareness of tax consequences. It is therefore important for the authorities to inculcate tax awareness among the younger group especially university students who are the potential tax payers in near

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