Tax practitioners' perception on tax audit and tax evasion: Survey evidence in Malaysia

TLDR: The authors explored the subject of tax audit and tax evasion in Malaysian taxation environment from the perception of tax practitioners using questionnaire method as a basis, and investigated on the extent of taxpayers' awareness toward their obligation under the self assessment system (SAS).

Abstract: Although the essence of tax audit is to promote voluntary compliance, tax practitioners’ need to understand its meaning and further eliminate intentional noncompliance. In this study, we explore the subject of tax audit and tax evasion in Malaysian taxation environment from the perception of tax practitioners. Using questionnaire method as a basis, we could investigate on the extent of taxpayers’ awareness toward their obligation under the self assessment system (SAS), draw out their experience in tax audits, discover a general method to effectively prevent tax evasion and assess taxpayers’ knowledge on identifying tax evasion transaction. Our study would have an implication for the Inland Revenue Board of Malaysia (IRBM) as it reflects the true phenomenon in Malaysia after the implementation of SAS through the responses gathered from business taxpayers and the tax paying public. It can serve as an indicator for future development of tax compliance in Malaysia.