Cash economy: tax evasion among SMEs in Malaysia
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, usin...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English English |
| Published: |
Emerald Group Publishing Ltd.
2016
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| Subjects: | |
| Online Access: | http://irep.iium.edu.my/55059/1/Cash%20economy_%20tax%20evasion%20amongst%20SMEs%20in%20Malaysia.pdf http://irep.iium.edu.my/55059/7/55059_Cash%20economy_SCOPUS.pdf http://irep.iium.edu.my/55059/ http://www.emeraldinsight.com/journal/jfc |
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| Summary: | 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.
Keywords Malaysia, SMEs, Tax evasion, Cash economy, Corporate income tax |
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