Cash economy: tax evasion amongst SMEs in Malaysia. Issue 4 (3rd October 2016)

• Record Type: Journal Article
• Authors: Mohamad, Azhar; Zakaria, Mohd Hasrol; Hamid, Zarinah
• Is Part Of: Journal of financial crime. Volume 23:Issue 4(2016)
• Page Start: 974
• Page End: 986
• Publication Date: 2016-10-03
• Subjects: Malaysia -- SMEs -- Tax evasion -- Cash economy -- Corporate income tax; Commercial crimes -- Periodicals; Commercial crimes -- Prevention -- Periodicals; Fraud -- Prevention -- Periodicals; Fraud -- Periodicals; White collar crimes -- Periodicals; 364.168
• DOI: 10.1108/JFC-05-2015-0025
• Languages: English
• ISSNs: 1359-0790

Abstract

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.