A Study on Self-Assessment Tax System Awareness in Malaysia

Abstract: This study seeks to explore and identify the key dimensions that determine the service quality of the Inland Revenue Board, Malaysia (IRBM) under the new Self-Assessment tax system. The scope of this study is based on the perceptions of individual taxpayers (comprising government employees, private sector employees and self-employed businessmen) and tax agents. First, this study aims to investigate if Malaysian petty traders understand the mechanism of self-assessment tax system, and secondly, to solicit the problem faced by Malaysian petty traders in tax compliance and tax audit in the era of Self-Assessment tax system (SAS). The empirical study was undertaken by conducting a questionnaire survey based on convenient sampling of 310 respondents, that is, 193 male petty traders and 117 female petty traders from 12 states in Malaysia. Findings from this study reviewed that the Self-Assessment tax system places an onerous responsibly on petty traders to comprehend the new system and to comply with the tax administration aspects as to the computations, payment of taxes, and record keepings. It is suggested that the IRBM to impose penalty discretionary, to take into account of the educational background, financial position, the amount of tax understated, the frequency of tax defaults of the petty traders. This study provides an important insight that the Malaysian tax policy makers and the IRBM ought to seriously consider a simpler and pragmatic tax assessment system, tailor make for petty traders to achieve tax administrative compliance efficiency , particularly on the taxpayers' awareness and the services needs have some implications for tax planners and policy makers