Personal income tax compliance under the malaysian taxation system

• Main Author: Ong Yih Tat
• Format: Thesis
• Language: English; English
• Published: 2023
• Subjects: HJ4629-4830 Income tax
• Online Access: https://eprints.ums.edu.my/id/eprint/39072/1/24%20PAGES.pdf; https://eprints.ums.edu.my/id/eprint/39072/2/FULLTEXT.pdf; https://eprints.ums.edu.my/id/eprint/39072/
• Institution: Universiti Malaysia Sabah

The purpose of audit enforcement by Inland Revenue Board of Malaysia (IRBM) always aims to higher tax compliance and followed by increase the tax collection. The study is therefore to examine the significant determinants of personal income tax compliance in Malaysia. However, economic and social factors also play a large role in the individual’s evasion decision. The researcher therefore includes the economic and social variables in the study. A quantitative approach was taken with secondary data obtained from IRBM, Economics and Social Data from Malaysian Department of Statistics, Malaysian Economic Planning Unit and Ministry of Higher Education from 2002 to 2017 were used to generate the results. EViews was the main statistical tool to conduct the analysis and in turn to answer the proposed hypothesis. The study supported the effect audit rate SG, Gross Domestic Product (GDP), employee, own account worker, age group between 15-64, bumiputras and enrolment on Individual Income Tax Collection with a significant of 5 per cent with positive association. Surprisingly, audit rate OG, Consumer Sentiments Index (CSI), age between 0-14 years, age 65 and above on Individual Income Tax Collection with a significant of 5 per cent with negative association. An increasing of 1 per cent of taxpayers who aged between 15-64 years may result in an increasing of 6.21 per cent in personal income tax collection, ceteris paribus with positive association. At this age, realistically, citizens are considered as an active employee or employer. They will earn income and therefore, the income tax revenue will increase. The study validated and expanded on prior research on the relationship between personal income tax revenue compliance, but not in personal income tax filing compliance. Additionally, it has significant implications for the Ministry of Finance and other relevant local authorities in enhancing the personal income tax collection strategy. Theoretical and practical implication are highlighted.