Underreporting income strategies among corporate taxpayers in large taxpayer branch

• Main Author: Mohd Hafiz, Mohd Yasin
• Format: Thesis
• Language: English; English; English
• Published: 2020
• Subjects: HJ4771.6 Income Tax. Tax Returns.; HJ Public Finance
• Online Access: https://etd.uum.edu.my/9713/1/s825140_01.pdf; https://etd.uum.edu.my/9713/2/s825140_02.pdf; https://etd.uum.edu.my/9713/3/s825140_references.docx; https://etd.uum.edu.my/9713/
• Institution: Universiti Utara Malaysia

The purpose of the study is to examine the evidence of underreporting income attributed to corporate taxpayers. This study reveals the underreporting income strategies undertaken by corporate taxpayers based on their characteristics such as size of firm, industry types, director ownership and tax agent status. The study used descriptive research design and descriptive statistics such as tables, frequencies and percentages to analyse the data. Secondary data sources on real corporate tax audit cases resolved by IRBM in 2018 were collected from Tax Operation Department. There are 899 field audit cases resolved for corporate taxpayers but samples selected consisting of 432 resolved cases that involved in underreporting of income in Large Taxpayer Branch. The result of the findings revealed that large firm tends to engage in underreporting income than the medium and small size firm. Meanwhile companies in the professional, scientific and technical industry recorded the highest number of cases involved in underreporting income than those in other industries. Director ownership companies have higher probabilities to underreport income than non director ownership companies. It is also noted that majority of corporate underreporting income cases were appointing non big 4 tax agent than big 4 tax agent as their tax preparer. Finally, the findings also revealed that unallowable expenses claim is the most significant strategy used by companies regardless of their characteristics. Hence this study provides useful feedback to the policy makers to improvised current policies and practices and redesigns an effective tax administration system in order to curb tax non compliance as tax evasion cannot be compromised in Malaysia.