Tax knowledge and tax compliance determinants in self assessment

individual taxpayers and therefore has been operational now for five tax years, giving
appropriate time to explore the extent to which developments of tax knowledge and
changes in compliant behaviour are visible, resulting from this change of tax
administrative approach. SAS for companies was first introduced in 2001 and this was
followed by business, partnership and cooperatives in 2003. The IRB therefore has now
experience of nine years of companies’ SAS (year of assessment 2001 to 2009). The
effectiveness of the SAS has been positive since its implementation. Tax collection from
companies has increased at an average rate of 12.78% per year (IRB Annual Report,
2002). The legislation, tax services and education and the enforcement of the law are
important elements which have led to the improvement of tax collection for companies.
Loo (2006: 284) also suggested that there is a need to explore the effectiveness of SAS
from various perspectives after several years of implementaion especially in terms of tax
knowledge and tax compliance behaviour. She also recommended a comparison between
Malaysia and European countries as vital to enhance Malaysian tax administration.
In addition, other factors help to make Malaysia an interesting context in which to study
tax compliance. These include the fact that it is a complex multi-racial and multi-faith
country, enabling us to contribute new evidence to the tax compliance literature where
previous studies evidenced that ethnicity and religion have a significant impact on
compliance (see Loo, 2006; Mohamad Ali, Mustafa and Asri, 2007; Devos, 2005; 2008).
Malaysia also provides an ideal opportunity for comparative analysis with previously
developed countries such as the United States, United Kingdom, Australia and OECD
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