Tax knowledge and tax compliance determinants in self assessment

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Chow, C.Y. (2004). Gearing up for the self assessment tax regime for individuals. Tax Nasional, 2 nd quarter, 20-23. Christian, C., and Gupta, S. (1993). New evidence on secondary evasion. Journal of the American Taxation Association, 15(1), 72-93. Chung, J., and Trivedi, V.U. (2003). The effects of friendly persuasion and gender on tax compliance behavior. Journal of Business Ethics, 47, 133–45. Clotfelter, C. T. (1983). Tax evasion and tax rates: An analysis of individual returns. The Review of Economics and Statistics, LXV(3), 363-73. Cohen, S.S. (1966). To tax and to please - the greatness of the United States, National Industrial Conference, Board of New York, 15 December, 268-272. Collins, J.H., Milliron, V.C., and Toy, D.R. (1992). Determinants of tax compliance: A contingency approach. The Journal of American Taxation Association, 14(2), 1- 29. Commissioner of Taxation (2004). Commissioner of Taxation Annual Report 2003- 2004, Canberra: Australian Government. Retrieved 23 Oct. 2009, from http://www.taxboard.gov.au/content/annual_rep/2004/downloads/Annual_Report_ 2003_04.pdf Cook, P.J. (1979). The clearance rate as the measure of criminal justice system effectiveness. Journal of Public Economics, 11, 135-42. Cornell, A. (1996). Self assessment the employers’ burden. Chartered Secretary, ICSA, United Kingdom, July, 12-13. Craner, J., and Lymer, A. (1999). Tax education in the UK: A survey of tax courses in undergraduate accounting degrees. Accounting Education: An International Journal, 8(2), 127-56. Cremer, H. and Gahvari, F. (1993).Tax evasion and optimal commodity taxation. Journal of Public Economics, 50, 261-75. Crosby, L. A., and Muehling, D. D. (1983). External variables and the Fishbein Model: mediation, moderation, or direct effects? Advances in Consumer Research, 10 (1), 94-99. Cuccia, A.D., and Carnes, G.A. (2001). A closer look at the relationship between tax complexity and tax equity perceptions. Journal of Economic Psychology, 22, 113-40. Cullis, J., and Lewis, A. (1985). Some hypotheses and evidence on tax knowledge and preferences. Journal of Economic Psychology, 6, 271-287. Cummings, R.G., Martinez-Vazquez, J., McKee, M., and Torgler, B. (2009). Tax morale affects tax compliance: Evidence from surveys and an artefactual field experiment. Journal of Economic Behavior and Organization, 70(3), 447-57. DasGupta, A. (2008). Asymptotic Theory of Statistics and Probability. New York: Springer. Das-Gupta, A., Lahiri, R., and Mookherjee, D. (1995). Income tax compliance in India: An empirical analysis. World Development, 23(12), 2051-64. De Vaus, D. (2002). Analysing Social Science Data: 50 Key Problems in Data Analysis. London: Sage Publications. Denzin, N.K.(1978). On the ethic of disguised observation. Social Problems, 15, 504- 504. Department of Statistic Malaysia. (2009). Retrieved 13 July 2009, from http://www.statistics.gov.my/portal/index.php?lang=en Department of Statistics Malaysia (2010). Retrieved 15 March 2010, from http://www.statistics.gov.my/portal/index.php?option=com_content&view=artic le&id=55%3Agross-domestic-product-gross-national-income-updated-26august-2009&catid=38%3Akaystats&Itemid=11&lang=en 402
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TAX KNOWLEDGE AND TAX COMPLIANCE DE
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ABSTRACT Self assessment system (SA
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DEDICATION To my late father, fathe
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TABLE OF CONTENTS Abstract ii Dedic
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2.6 SELF ASSESSMENT SYSTEM - A CONC
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4.3.5.1 Age 214 4.3.5.2 Income leve
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6.3 RESPONDENT BACKGROUND 288 6.4 I
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TO TAX ADMINISTRATORS 392 8.4 LIMIT
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LIST OF TABLES Table 2.1: SAS intro
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independent variables. Table 6.14:
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1.1 INTRODUCTION CHAPTER 1 INTRODUC
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Efficiency refers to how the tax au
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(US) and the United Kingdom (UK) we
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and Lundstedt, 1976), gender (Vogel
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Revenue Board Malaysia (IRB). The s
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constitutional elective monarchy (f
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countries. Despite similar capitali
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development on tax compliance resea
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conclusions about what the Malaysia
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could provide new insights to the I
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ecome more aware of their tax oblig
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“ future research can explicitly
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The result of this study will contr
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and stepwise multiple regressions.
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CHAPTER 2 SELF ASSESSMENT SYSTEMS-
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Table 2.1: SAS introduction in coun
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with postwar democratic thought (Ki
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Formal System. Table 2.2 summarises
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To reduce the possibility of taxpay
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This could be aided through continu
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of the tax system (Eriksen and Fall
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have a good and reasonable knowledg
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compliance, many taxpayers perceive
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had a low significant impact on com
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2.4 HOW SELF ASSESSMENT IS OPERATED
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keeping as well as the perceived le
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issues still remain important and c
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Table 2.4: United States’ complia
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In 1944 a new income tax system was
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assessment system, to overcome thes
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of the amounts deducted by employer
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Notes: Table 2.9 - United Kingdom-
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were quite difficult to complete. M
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In conclusion, tax development in t
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• Individual income tax has a min
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2008). E-Tax (e-filing) was also in
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Self-assessment in Japan has gradua
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administrations and their perceptio
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In terms of personal income tax, th
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Although more operations are becomi
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Table 2.16: OECD Self-assessed Coun
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it is acknowledged that wide variet
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deemed to be the amount of tax liab
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Tax and compliance costs remain a c
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) Sri Lanka Income tax in Sri Lanka
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Table 2.21: Tax development in Sri
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Table 2.23: Sri Lanka - Tax revenue
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information which is related to tax
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assessed, they represented only 67
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(d) applicable to ‘white return
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Sources: OECD (2007:124) (OECD in F
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COUNTRY Table 2.27: Aggregate Admin
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United States Table 2.28: Enforceme
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Malaysia impose a penalty percentag
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2.5.5.3 Electronic filing Table 2.3
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Table 2.31: SAS - Tax Education in
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and to speed up tax collections tha
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Peninsular Malaysia is separated fr
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ITA consolidated the three acts of
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3.4 PERSONAL INCOME TAXES IN MALAYS
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3.4.4 Basis year Section 2 of the I
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eturn (refer Appendix 4). A separat
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Table 3.1: List of deductions for Y
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c) Amount of zakat 61 payment. The
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Having discussed how personal incom
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A new system, known as the Self Ass
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igger increase in 2006 too), a sign
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1) Married woman were required to f
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Table 3.6: A brief comparison on th
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impact upon total revenue. Table 3.
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(STD) 67 audits and 4) investigatio
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Centres (RSCs) in Perak, Selangor,
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planned and implemented special tra
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sufficiently ‘educate’ taxpayer
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which netted RM226.05 million in ta
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In the next chapter, I will discuss
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compliance including age, gender, l
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isks of non-compliant behaviour the
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The wider perspective of tax compli
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Table 4.1: Approach to tax complian
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Figure 4.1: Compliance Index in Ind
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Table 4.2: Tax compliance index int
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Table 4.3: Tax compliance in transi
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Kasipillai et. al. (2003), Lewis (1
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7. GDP per capita, 8. tax system, 9
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Singapore 6.00 8.18 Slovakia 2.62 2
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Given evidence that tax knowledge a
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The result of the study suggested t
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there is insufficient knowledge abo
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taxpayers who read an objectively p
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In conclusion, after taking into co
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4.3.1.1 Tax rates This subsection d
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2008) and increasing tax rates will
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The result also evidenced that the
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4.3.1.4 Summary This subsection dis
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Roth et. al. (1989) suggested that
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simplified the range of guidance th
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potentially could help taxpayers to
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probability) using three major data
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whole population of North Carolina,
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factors in taxpayer compliance, nam
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likely to occur (Allingham and Sand
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y the government and the prices reg
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4.3.3.4 Referents groups (family an
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and referent groups. In the followi
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Table 4.5: Relationship between fin
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evading tax and the consequences of
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Table 4.6: Some previous studies on
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4.3.5.2 Income level Jackson and Mi
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Table 4.7 : Some previous studies o
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4.3.5.3 Culture Chan et. al. (2000)
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avoidance (UA) and masculinity (MAS
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are not aiming to become accountant
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2003 Hasseldine and Hite Female tax
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eferent groups) because these facto
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5.1 INTRODUCTION CHAPTER 5 RESEARCH
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Using a sample from a telephone dir
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income. However, the total of indiv
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taxpayers had gone through filing p
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2004 Ming Ling, Obid and Meera 2003
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5.2.2 The respondents Like Spicer a
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independence particularly from any
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X be chosen. Respondents are asked
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probability’ to ‘very high prob
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Loo (2006) used a mixed method appr
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questions’ approach was based on
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‘extremely good’, ‘good’,
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5.4.1.2 Data analysis technique T-t
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5.4.2.2 Hypotheses development for
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The association between tax knowled
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TNAWARE i - Tax knowledge about awa
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A. Demographics control variables (
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B. Tax background control variables
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5.4.3.3 Data analysis techniques In
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The role of Inland Revenue Board (E
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H4B- Positive perception of governm
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Besley, Preston and Ridge (1997) re
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In agreement with Spicer and Lundst
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improved through better tax knowled
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EQUITY i - Perception on equity and
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H5B - With regard to other tax comp
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used. A wider coverage of tax knowl
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6.1 INTRODUCTION CHAPTER 6 ANALYSIS
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total population of Malaysia, parti
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300 250 200 150 100 50 0 128 252 Fi
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500 400 300 200 100 0 333 1,001- 2,
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to better argue that a relationship
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6.5.1 T-tests, Mann-Whitney U. and
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familiarity with employment income
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no significant mean difference betw
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6.5.2 One-way ANOVA, post hoc test
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Non-parametric test, KW and median
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(B6) (F= 3.1113, p < 0.01) and reba
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IV IV A5 (RM) 10000 A5 (RM) 10000 A
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tax knowledge (p
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KW tests also suggested that there
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Figure 6.6 illustrates the results
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Table 6.12: Summary and relationshi
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Table 6.13: Stage 2 -Pearson correl
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Table 6.14 : Stepwise multiple regr
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The estimated coefficient of correl
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low correlation (p
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A. Dependent variable TCHYP Table 6
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TCHYP 40:60 = α + β1TNRESi + β2T
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B. Dependent variable TCDIR Table 6
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TCDIR 0 = α + β1TNRESi + β2TNEMP
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EQUITY and TOTAL were significantly
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6.8.2 Factors affecting tax complia
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GROUP i - Referent group ROLEi i -
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6.8.4 Summary results of Stage 4 Ta
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Table 6.25: Stage 5 -Pearson correl
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Note: Panel B: (Constant) 20.773 9.
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6.9.2 Dependent variable - TCDIR Ta
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Table 6.28 (Panel B) suggests that
Page 369 and 370: Notes: *** Significant at 0.01 leve
Page 371 and 372: subject matter. Most researchers vi
Page 373 and 374: ANOVA test results were sufficientl
Page 375 and 376: Table 6.33: Tax compliance direct -
Page 377 and 378: Table 6.35: Tax compliance hypothet
Page 379 and 380: Table 6.37: Results summary Results
Page 381 and 382: 7.1 INTRODUCTION CHAPTER 7 DISCUSSI
Page 383 and 384: eason why the CRA emphasised the
Page 385 and 386: As this study suggested that tax kn
Page 387 and 388: and Hudson, 2002; Wearing and Heade
Page 389 and 390: up with education programmes that c
Page 391 and 392: of being audited, perceptions of go
Page 393 and 394: Braithwaite et. al. (2009). In addi
Page 395 and 396: In relation to this finding (financ
Page 397 and 398: cultivating personal awareness of c
Page 399 and 400: With regard to age, this result sup
Page 401 and 402: CHAPTER 8 CONCLUSIONS Self assessme
Page 403 and 404: This study seeks to contribute to t
Page 405 and 406: Like many countries, implementing a
Page 407 and 408: identified the tax compliance deter
Page 409 and 410: Further analysis (refer to section
Page 411 and 412: middle income earners) for tax admi
Page 413 and 414: latest information on tax regulatio
Page 415 and 416: 8.4 LIMITATIONS It is acknowledged
Page 417 and 418: espondents regarding tax compliance
Page 419: Bank Negara Malaysia (2006). Annual
Page 423 and 424: Fishbein, M., and Ajzen, I. (1975).
Page 425 and 426: Inland Revenue Board (IRB) Malaysia
Page 427 and 428: Lempert, R. (1988). Internal Revenu
Page 429 and 430: Moriaryty, S. (1998). Tax complianc
Page 431 and 432: Shoven, J. (1989). The Japanese tax
Page 433 and 434: Vogel. J. (1974). Taxation and publ
Page 435 and 436: APPENDIX 1 Section 13. General prov
Page 437 and 438: shall be deemed to be derived from
Page 439 and 440: year of assessment (the responsibil
Page 441 and 442: APPENDIX 4 FORM BE 2007 FOR INDIVID
Page 443 and 444: Name Tax Reference No. PART C : STA
Page 445 and 446: Name Tax Reference No. PART F: STAT
Page 447 and 448: for for for for for reference refer
Page 449 and 450: GENERAL INSTRUCTION. This survey is
Page 451 and 452: ii) What is the probability of comp
Page 453 and 454: The following income MUST BE INCLUD
Page 455 and 456: SECTION C (TAX COMPLIANCE) Please s
Page 457: D11. Designation (Grade for governm
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