The Determinants of Individual Taxpayers’ Tax Compliance Behaviour in Peninsular Malaysia

Tan Swee Kiow(1*), Mohd Fuad Mohd Salleh(2), Aza Azlina Bt Md Kassim(3),

(1) Faculty of Business and Finance, Universiti Tunku Abdul Rahman, Malaysia
(2) Faculty of Business, Universiti Selangor, Malaysia
(3) Faculty of Business, Universiti Selangor, Malaysia
(*) Corresponding Author


The findings from this review suggested that tax compliance behaviour of individual taxpayers is influenced by ethical perception of individual taxpayers and their ethical perception is affected by public governance and transparency in government operations. Ethical perception plays an important role for individual taxpayers to report their income correctly. Ethical perception varies from an individual to another, which influenced by changes in their surroundings and their experiences when interact with government. Perceptions of how taxpayers’ money is being utilised, benefits they derived from government or others evade to pay tax are considered as possible factors influencing their compliance behaviour. Taxpayers will be more compliance if government use tax monies wisely or when taxpayers get benefits for the taxes paid in terms of public goods and social amenities that they prefer. Transparent surroundings will enhance taxpayers’ confidence in public bodies. Taxpayers are concerned on transparency in public procurement as lack of transparency may cause corruption and reduces public sector efficiency. In contrast, scholars argued that greater degree of transparency could lead to less trust as it will be easier for taxpayers to audit government and they might blame government for small mistakes.


public governance, transparency, ethical perception, tax compliance behaviour

Full Text:



Abu Bakar, N. B., & Ismail, S. (2011). Financial management accountability index (FMAI) in Malaysian public sector: A way forward. International Review of Administrative Sciences,77(1), 159-190.

Alabede, J. O., Ariffin, Z. B. Z., & Idris, K. M. (2012). Public Governance Quality and Tax Compliance Behavior in Nigeria: The Moderating Role of Financial Condition and Risk Preference. Issues in Social and Environmental Accounting, 5(1/2), 3-24.

Alabede, J. O., Ariffin, Z. B., & Idris, K. M. (2011). Public governance quality and tax compliance behavior in Nigeria: The moderating role of financial condition and risk preference. Issues in Social and Environmental Accounting, 5(1/2), 3-24

Ali, M. M., H. W. Cecil and J. A. Knoblett: 2001, ‘The Effects of Tax Rates and Enforcement Policies on Taxpayer Compliance: A Study of SelfEmployed Taxpayers’, Atlantic Economic Journal 29, 186–202.

Al-Khatib, J.A., M. Y. A. Rawwas, and S. J. Vitell. 2004. Organizational ethics in developing countries: a comparative analysis. Journal of Business 55: 309-322.

Alleyne, P., Devonish, D., Allman, J., Charles-Soverall, W., & Young Marshall, A. (2010). Measuring ethical perceptions and intentions among undergraduate students in Barbados. The journal of American academy of business, 15(2), 319-326.

Allingham, M., & Sadmo, A. (1972). Income Tax Evasion: A Theoretical Analysis. Journal of Public Economics, 1(1), 323-338.

Alm, J. 1991. A perspective on the experimental analysis of taxpayer reporting. The Accounting Review 66(3): 577–593.

Alm, J., B. R. Jackson, and M. McKee. 1993. Fiscal exchange, collective decision institutions, and tax compliance. Journal of Economic Behavior and Organization 22(3): 285–303.

Alm, J., B. Torgler. 2011. Do ethics matter? Tax compliance and morality. Journal of Business Ethics 101: 635–651.

Alm, J., McClelland, G. H., & Schulze, W. D. (1992). Why do people pay taxes?. Journal of public Economics, 48(1), 21-38.

Aronmwan, E. J., Imobhio, E., & Izedonmi, F. (2015). Determinants of Personal Income Tax Compliance: Perception of Nigerian Tax Payers.Available at SSRN 2619855.

Arrowsmith, S. (2009). EC Regime on Public Procurement. International Handbook of Public Procurement. K. Thai. Boca Raton, London, New York, CRC Press: 251-290.

Asian Development Bank, “Governance: Sound Development Management”. (1995, August). (accessed May 22, 2015)

Badara, M. S. (2012). The effect of tax audit on tax compliance in Nigeria (A study of Bauchi State Board of Internal Revenue). Research Journal of Finance and Accounting, 3(4), 74-80.

Barraclough, S., & Phua, K. L. (2007). Chronicling health care policy change in Malaysia: from consensus to an uncertain and contested agenda. In K. L. Phua (Ed.), Malaysia public policy and marginalised group (pp. 143-163). Kuala Lumpur: Malaysian Social Science Association.

Besancon, M. (2003). Good governance ranking : the art of measurement. Cambridge: World Peace Foundation.

Birkinshaw, P.J., ‘Transparency as a Human Right’, in Hood, C. and Heald, D. (eds.), Transparency: The Key to Better Governance?, Oxford: Oxford University Press, 2006, pp. 47-58

Blendon, R., Benson, J., Morin, R., Altman, D., Brodie, M., Brossard, M., and M. James. 1997. “Changing Attitudes in America.” In Why People Don’t Trust Government, edited by J. Nye, J., P. Zelikow, and D. King, 205-216. Cambridge, MA: Harvard University Press.

Bok, D. 1997. “Measuring the Performance of Government.” In Why People Don’t Trust Government, edited J. Nye, P. Zelikow, and D. King, 55-75. Cambridge, MA: Harvard University Press.

Borensztein, E., J. DeGregorio and J.-W. Lee (1998). “How does foreign direct investment affect economic growth?” Journal of International Economics 45: 115-135.

Bovaird, T., & Löffler, E. (2003). Evaluating the quality of public governance: indicators, models and methodologies. International Review of Administrative Sciences, 69(3), 313-328.

Bovens, M.A.P. 2003. De Digitale Republiek: Democratie en rechtsstaat in de informatiemaatschappij. Amsterdam: Amsterdam University Press.

Chan CW, Troutman CS, O’Bryan D (2000). An expanded model of taxpayer compliance: empirical evidence from the United States and Hong Kong. Journal of International Accounting, Auditing and Taxation; 9(2): 83-103.

Chan, K., & Mo, P. (2000). Tax Holidays and Tax Noncompliance: An Empirical Study of Corporate Tax Audits in China's Developing Economy. Accounting Review, 469-484.

Chow, C.Y., 2004. “Gearing Up for the Self – Assessment Tax Regime for Individuals”, Tax National, 2nd Quarter, pp: 20-23

Clotfelter, C. T. (1983). Tax evasion and tax rates: An analysis of individual returns. Review of Economics and Statistics, LXV(3), 363-373.

Cochrane, A. (1993). From financial control to strategic management: The changing faces of accountability in British local government. Accounting, Auditing & Accountability Journal.Bradford: Vol. 6, Iss. 3; p. 30.

Cohn, Gordon (1998). “The Jewish View on Paying Taxes.” Journal of Accounting, Ethics & Public Policy 1: 109–20.

Cook, F. L., Jacobs, L. R., & Kim, D. (2010). Trusting what you know: Information, knowledge, and confidence in Social Security. The Journal of Politics, 72(02), 397-412.

Crain, W. (2005), Theories of Development: Concepts and Applications, 5th ed., Pearson Prentice Hall, Upper Saddle River, NJ.

Cullis, J., Jones, P. and Savoia, A. (2012), “Social norms and tax compliance: framing the decision to pay tax”, The Journal of Socio-Economics, Vol. 41 No. 2, pp. 159-168.

Cummings, R.G., Martinez-Vazquez, J., McKee, M., Torgler, B., 2009. Tax morale affects tax compliance: evidence from surveys and an artefactual field experiment. J. Econom. Behav. Org. 70 (3), 447–457.

Curtin, D., & Meijer, A. J. (2006). Does transparency strengthen legitimacy? Information polity, 11(2), 109-122.

D'Arcy, M. (2011). Why do citizens assent to pay tax? Legitimacy, taxation and the African state. Afrobarometer Working Paper No. 126.

Daryl M. Guffey and mark W. McCartney, (2007). The perceived Importance of an Ethical Issue as a Determinant of Ethical Decision-making for Accounting Students in an Academic Setting. Accounting Education: an International Journal Vol. 17, No. 3, 327 – 348, September 2008.

Drew, C. H., & Nyerges, T. L. (2004). Transparency of environmental decision making: A case study of soil cleanup inside the Hanford 100 area.Journal of Risk Research, 7(1), 33-71.

European Commission (2004). Buying Green! A handbook on environmental public procurement. Brussels, European Commission,.

European Commission (2006). Commission Staff Working Paper: Impact Assessment Report - Remedies in the Field of Public Procurement SEC (2006) 557.

European Commission (2011). Green Paper on the modernisation of EU public procurement policy - Towards a more efficient European Procurement Market COM(2011) 15 final.

European Commission (2010). Europe 2020 - A strategy for smart, sustainable and inclusive growth Communication COM (2010) 2020 final.

Evenett, S. and B. Hoekman (2004). International Disciplines on Government Procurement.

Everest-Phillip, M., & Sandall, R. (2009). Linking business tax reform with governance: How to measure sucess. Working paper, Investment Climate Department, World Bank Group.

Etzioni, A. 2010. “Is transparency the best disinfectant?” The Journal of Political Philosophy 18(4): 389-404

Ezzamel, M., and Willmott, H. (1993). Corporate governance and financial accountability: Recent reforms in the UK public sector. Accounting, Auditing & Accountability Journal. Bradford: Vol. 6, Iss. 3; p. 109 (24 pages)

Falsetta, D., Schafer, J. K., & Tsakumis, G. T. (2015). How government spending impacts tax compliance. Available at SSRN 2658393.

Fehr, E., & Gächter, S. (2000). Fairness and retaliation: The economics of reciprocity. The journal of economic perspectives, 14(3), 159-181.

Fjeldstad, O. H., & Semboja, J. (2001). Why people pay taxes: The case of the development levy in Tanzania, World Development, 29(1), 2059-2074.

Fischer CM, Wartick M, Mark M (1992). Detection probability and taxpayer compliance: Are view of the literature. Journal of Accounting Literature; 11: 1-49.

Fjeldstad, O. H., Schulz-Herzenberg, C. S., & Sjursen, I. H. (2012). Peoples’ views of taxation in Africa: A review of research on determinants of tax compliance. Chr. Michelsen Institute (CMI) Working papers 2012:7

Frey, B. S. (2003). The Role of Deterrence and Tax Morale in Taxation in the European Union, Jelle Zijlstra Lecture, Netherlands Institute for Advanced Study in the Humanities and Social Sciences (NIAS).

Gerring, J., & Thacker, S. C. (2004). Political institutions and corruption: The role of unitarism and parliamentarism. British Journal of Political Science, 34(02), 295-330.

Graetz, M. J., & Wilde, L. L. (1985). The economics of tax compliance: fact and fantasy. National Tax Journal, 38(3), 355-363.

Grimmelikhuijsen, S.G., & Meijer, A. J. (2012). Effects of Transparency on the Perceived Trustworthiness of a Government Organization: Evidence from an Online Experiment. Journal of Public Administration Research and Theory, Inc, November 5, 2012.

Grimmelikhuijsen, S.G. 2012. Transparency and trust. An experimental study of online disclosure and trust in government. Dissertation, Utrecht University.

Halla, M., 2012. Tax morale and compliance behavior: first evidence on a causal link. B.E. J. Econom. Anal. Policy 12 (1), pages 13.

Hamm, J. L. (1995). Income level and tax rate as determinants of taxpayer compliance: an experimental examination.

Harris, T. D. (1989). The effect of type of tax knowledge on individuals' perceptions of fairness and compliance with the federal income tax system: An empirical study.

Heald, D. (2006). Varieties of transparency (No. 135, pp. 25-43). Oxford University Press for The British Academy.

Hofmann, E., Hoelzl, E., Kirchler, E., 2008. Preconditions of voluntary tax compliance: knowledge and evaluation of taxation, norms, fairness, and motivation to cooperate. J. Psychol. 216 (4), 209–217.

Ho, D., Ho, D. and Young, A. (2013), “A study of the impact of culture on tax compliance in China”, International Tax Journal, Vol. 39 No. 3, pp. 33-50.

Ho, J. K., Loo, E. C., & Lim, K. P. (2006). Perspective of non-taxpayers’ perception on issues of ethics and equity in tax compliance. Malaysian Accounting Review, 5(2), 47-59.

Hood, C. (2006). Transparency in historical perspective (No. 135, pp. 3-23). Oxford University Press.

Jackson, B. R., & Milliron, V. C. (1986). Tax compliance research: Findings, problems, and prospects. Journal of Accounting Literature, 5(1), 125-165.

Karlinsky, S., Burton, H., & Blanthorne, C. (2004). Perceptions of Tax Evasion as a Crime. eJournal of Tax Research, 2(2), 226-240.

Kasipillai, J. (1992), “Developing and Implementing a Comprehensive Taxation Curriculum”, ACCACMADIA, Journal of School of Accountancy, MARA Institute of Technology (2), 36-42.

Kasipillai, J., Aripin, N., & Amran, N. A. (2003). The influence of education on tax avoidance and tax evasion. eJournal of Tax Research, 1(2), 134-46.

Kasipillai, J. (2013). A Guide to Malaysian Taxation, 2nd Edition, published by McGraw-Hill Education (Malaysia) Sdn. Bhd.

Keenan, A. and Dean, P.N. (1980). Moral Evaluations of Tax Evasion. Social Policy and Administration, 14(3): 209-220.

Kinsey, K.A., 1985, Theories and models of tax cheating, Taxpayer Compliance Project working paper no. 84-2 (American Bar Association, Chicago, IL).

Kirchler, E. (2007). The economic psychology of tax behavior. Cambridge: Cambridge

Kirchler E, Hoelzl E, Wahl I. (2008) Enforced versus voluntary tax compliance: The “slippery slope” framework. Journal of Economic Psychology, 29(2): 210-225.

Klepper, S., & Nagin, D. (1989). Tax compliance and perceptions of the risks of detection and criminal prosecution. Law and society review, 209-240.

Kogler C, Batrancea L, Nichita A, Pantya J, Belianin A, Kirchler E. (2013). Trust and power as determinants of tax compliance: Testing the assumptions of the slippery slope framework in Austria, Hungary, Romania and Russia. Journal of Economic Psychology. 34: 169-180.

Landry, R., Moyes, G. D., & Cortes, A. C. (2004). Ethical perceptions among Hispanic students: differences by major and gender. Journal of Education for Business, 80(2), 102-108.

Larsson, T. 1998. “How Open Can Government Be? The Swedish Experience.” In Openness and Transparency in the European Union, edited by V. Deckmyn, and Thomson, 39-51. Maastricht: European Institute of Public Administration.

Lassen, D. D. (2003). Ethnic divisions and the size of the informal sector. EPRU, Economic Policy Research Unit.

Levi, M. (1988). Of rule and revenue. Berkeley: University of California Press.

Loo, E. C., Evans, C., & McKerchar, M. A. (2012). Challenges in Understanding Compliance Behaviour of Taxpayers in Malaysia. Asian Journal of Business and Accounting, 3(2), 2010.

Loo, E. C., & Sapari, A. (2012). The influence of personal, social and institutional factors on tax compliance behaviour of Malaysian individual taxpayers.

Mahler, J., and P.M. Regan. 2007. “Crafting the Message: Controlling Content on Agency Web Sites.” Government Information Quarterly 24: 505-521.

Mann, A. J., & Smith, R. (1988). Tax attitudes and tax evasion inPuerto Rico:A survey of upper income professionals. Journal of Economic Development , 13(1), 121-141.

Marziana Hj. Mohamad, Norkhazimah Ahmad, Mohmad Sakarnor Deris (2010) : Perceptions of Taxpayers With Level of Compliance: A Comparison in the East Coast Region, Malaysia: Journal of Global Business and Economics, vol.1, issue 1, pages 241-257

Mauro, P. (1998). “Corruption and the composition of government expenditure.” Journal of Public Economics 69: 263–279.

McGee, Robert W (1994). “Is Tax Evasion Unethical?” University of Kansas Law Review 42: 411–35.

McGee, R., Aljaaidi, K. S., & Musaibah, A. S. (2012). The Ethics of Tax Evasion: A Survey of Administrative Sciences’ Students in Yemen.International Journal of Business and Management, 7(16), 1.

McGee, R. W., Devos, K., & Benk, S. (2016). Attitudes towards Tax Evasion in Turkey and Australia: A Comparative Study. Social Sciences,5(1), 10.

Meijer, H. L. (2009). What prospects for European fiscal policy?. International Journal of Economics and Business Research, 1(1), 21-42.

Mohdali, R., Isa, K., & Yusoff, S. H. (2014). The impact of threat of punishment on tax compliance and non-compliance attitudes in Malaysia.Procedia-Social and Behavioral Sciences, 164, 291-297.

Modugu, P. K., Eragbhe, E., & Izedonmi, F. (2012). Government accountability and voluntary tax compliance in Nigeria. Research Journal of Finance and Accounting, 3(5), 69-76

Molero, J.C., Pujol, F., 2012. Walking inside the potential tax evader’s mind: tax morale does matter. J. Business Ethics 105 (2), 151–162.

Moore, M. (2004). Revenues, state formation, and the quality of governance in developing countries. International Political Science Review, 25(1), 297‐319.

Muehlbacher, S., Kirchler, E., 2010. Tax Compliance by Trust and Power of Authorities. Internat. Econom. J. 24 (4), 607–610.

Noll, J., Schnell, K., & Zdravkovic, S. (2016). Tax and Ethics: A Panoramic View. Available at SSRN 2729764.

Nye, J. S., Zelikow, P., & King, D. C. (1997). Why people don't trust government. Harvard University Press.

OECD (2003). Transparency in Goverment Procurement: The Benefi ts of Effi cient Governance and Orientations for Achieving It Paris, OECD.

Okoye, P. V. C., Akenbor, C. O., & Obara, L. C. (2012). Promoting sustainable tax compliance in the informal sector in Nigeria. An International Journal of Arts and Humanities, 1(1), 40-54.

O’Neill, O. 2002. A Question of Trust, The BBC Reith Lectures 2002. Cambridge: Cambridge University Press.

O’Neill, O. 2006. “Transparency and the Ethics of Communication.” In Transparency: The Key to Better Governance?, edited by C. Hood and D. Heald, 75-90. Oxford: Oxford University Press.

Ortega, D., Ronconi, L., & Sanguinetti, P. (2012). Reciprocity and willingness to pay taxes: evidence from a survey experiment in Latin America.Economía, 16(2), 55-87.

Palil, M. R. (2010). Tax knowledge and tax compliance determinants in self assessment system in Malaysia (Doctoral dissertation, University of Birmingham).

Piotrowski, S. J., & Van Ryzin, G. G. (2007). Citizen attitudes toward transparency in local government. The American Review of Public Administration, 37(3), 306-323.

Rotberg, R. I. (2005). Strenghtening governance : Ranking countries would help. The Washington Quarterly , 28(1), 71-81.

Rotberg, R. I., & Gisselguist, R. M. (2009). Strengthening African governance: Index of African governance results and rankings. Cambridge: World Peace Foundation.

Saad N. (2014) Tax Knowledge, Tax Complexity and Tax Compliance: Taxpayers’ View. Procedia-Social and Behavioral Sciences. 109: 1069-1075.

Salleh, D., & Khalid, S. N. A. (2011). Accountability practice at local government of Malaysia. In 2nd International Conference on Business and Economics Research Proceeding.

Shafer, W. E. (2015). Ethical climate, social responsibility, and earnings management. Journal of Business Ethics, 126(1), 43-60.

Singh, V. and Bhupalan, R. (2001). The Malaysian Self-Assessment System of Taxation, Issues and Challenges. Tax Nasional, 3rd Quarter: 12-17.

Siddiquee, N. A. (2010). Combating corruption and managing integrity in Malaysia: A critical overview of recent strategies and initiatives. Public Organization Review, 10, 153-171.

Smatrakalev, Gueorgui (1988). “Walking on the Edge: Bulgaria and the Transition to a Market Economy.” In The Ethics of Tax Evasion. Edited by Robert W. McGee. Dumont: The Dumont Institute for Public Policy Research, pp. 316–29.

Song, Y. D., & Yarbrough, T. E. (1978). Tax ethics and taxpayer attitudes: A survey. Public administration review, 442-452.

Spicer, H.W.and Lurdstedt, S.B. (1976). Understanding Tax Evasion. Public Finance, 31(2): 295-305.

Stolfi, F., & Murniati, S. (2014). Transparency in European public procurement: benefits and lessons for Malaysia.

Suryanto, Tulus. "Audit Delay and Its Implication for Fraudulent Financial Reporting: A Study of Companies Listed in the Indonesian Stock Exchange." European Research Studies 19.1 (2016): 18.

Suryanto, Tulus. "Dividend Policy, Information Technology, Accounting Reporting to Investor Reaction And Fraud Prevention." International Journal of Economic Perspectives 10.1 (2016): 138.

Tanzi, V. and H. Davoodi (1997). “Corruption, Investment and Growth.” IMF Working Paper WP/97/139.

Tamari, Meir (1998). “Ethical Issues in Tax Evasion: A Jewish Perspective.” Journal of Accounting, Ethics & Public Policy 1: 121–32.

Tayib, M., Coombs, H. M., & Ameen, J. R. M. (1999). Financial reporting by Malaysian local authorities: A study of the needs and requirements of the users of local authority financial accounts. International Journal of Public Sector Management, 12(2), 103-121.

Torgler, B. (2001). What do we know about tax morale and tax compliance?.Rivista internazionale di scienze economiche e commerciali, 48(3), 395-420.

Torgler, Benno. 2003. “Tax Morale, Rule-Governed Behaviour and Trust,” Constitutional Political Economy 14: 119–40.

Uadiale, O. M., Fagbemi, T.O., & Ogunleye, J. O. (2010). An empirical study of the relationship between culture and personal income tax evasion in Nigeria. European Journal of Economics, Finance and Administrative Sciences, 20(1), 116-126.

Van Rooij, B. (2015), “Weak enforcement, strong deterrence: dialogues with Chinese lawyers about tax evasion and compliance”, Law & Social Inquiry, Vol. 41 No. 2 (Spring), pp. 288-310.

Wahl, I., Kastlunger, B., & Kirchler, E. (2010). Trust in authorities and power to enforce tax compliance: An empirical analysis of the “Slippery Slope Framework”. Law & Policy, 32(4), 383-406.

Welch, E. W., Hinnant, C. C., & Moon, M. J. (2005). Linking citizen satisfaction with e-government and trust in government. Journal of public administration research and theory, 15(3), 371-391.

Wenzel, M. (2005), “Motivation or rationalization? Causal relations between ethics, norms and tax compliance”, Journal of Economic Psychology, Vol. 26 No. 4, pp. 491-508.

Wittmer, D.P. (2000). ‘Ethical sensitivity in management decisions: developing and testing a perceptual measure among management and professional student groups’. Teaching Business Ethics, 4:2, 181–205.

Worthy, B. 2010. More Open but Not More Trusted? The Effect of the Freedom of Information Act 2000 on the United Kingdom Central Government. Governance: An International Journal of Policy, Administration, and Institutions 23(4): 561–582

Yaakob, A. F., Kadir, N. A., & Jusoff, K. (2009). Accountability from the perspective of Malaysian governance. Journal of Politics and Law, 2(3), 48-60.

Young, A., Lei, L., Wong, B., & Kwok, B. (2016). Individual tax compliance in China: a review. International Journal of Law and Management, 58(5), 562-574.

Article Metrics

Abstract : 2082 times
PDF : 1638 times


  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License. web
counter View My Stats