Cash economy: tax evasion amongst SMEs in Malaysia

Abstract

Purpose The purpose of this study is to investigate the relationship between tax evasion and certain demographic factors such as location, engagement of tax agent, size and type of small- and medium-sized enterprises (SMEs) industry in Malaysia. Design/methodology/approach In this study, using proprietary tax audit data from the Inland Revenue Board of Malaysia (IRBM) on the 2011 tax returns of SMEs, the authors run a multiple regression analysis to examine the impact of location, agent, type of industry, size of enterprise and type of tax evasion on SMEs’ tax evasion in Malaysia. Findings The authors find that tax evasion among SMEs in Malaysia is the highest when the business is located in a suburban environment and has no tax agent. Tax evasion is also influenced by the size of the SME (micro or medium). Originality/value This study gives insight that the IRBM can use to aid its collection department in profiling SMEs that have a higher tendency to evade paying tax.

Examining economic and technology‐related barriers of small‐ and medium‐sized enterprises internationalisation: An emerging economy context

“…Although SMEs in some countries enjoy preferential taxes, it is also pointed out that most SMEs are missing out of the benefits of international and global businesses as a result of diverse government policies on taxes. Mohamad, Zakaria, and Hamid () found that high and multiple taxes imposed on SMEs are hindering most businesses from potential growth. It is also revealed that the sky‐high tax and tariff imposed by home country is ranked as sixth on problems faced by SMEs at the time of expansion to international market.…”

Menguak Dimensi Kecurangan Pajak

“…Tidak berarti ketika ada kecurangan pajak disebabkan oleh perilaku agresif konsultan pajak. Penelitian yang dilakukan di Malaysia membuktikan bahwa kecurangan pajak lebih banyak dilakukan oleh usaha kecil menengah yang berada di pinggiran kota tanpa peranan konsultan pajak (Mohamad, Zakaria, & Hamid, 2016). Shafer, Simmons, & Yip (2016) menjelaskan perlunya konsultan pajak memiliki komitmen profesional yang tinggi untuk mencegah tekanan klien yang menginginkan tindakan penghindaran pajak agresif dengan tujuan meningkatkan keuntungan wajib pajak jangka pendek.…”

Government Regulation 46/2013 as Income Tax Income Facility

“…Setyorini (2016) state that tax socialization has a very important role to increase the willingness to pay SME taxes. SMEs tends to do the tax evasion if there is no or less tax agent in their business area (Mohamad, Zakaria, & Hamid, 2016).…”