Tax knowledge in self-assessment system: evidence on demographic factors in Malaysia

Abstract

In many countries around the world tax compliance becomes a major issue.The analyis in this paper emphasizes on slf assessment system (SAS) which is implemented in year of assessment 2004 for individual taxpayer. Knowledge about tax law is assumed to be importance for preference in order to fulfill the tax return (in Malaysian Form B) especially in self-assessment system (SAS). Nevertheless, there is little research that explicitly considers how attitudes toward taxation ( tax compliance) are influenced by specific tax knowledge of tax regulations nad their economics effects SAS is essentially an approach whereby taxpayers are required by law to determined their taxable income, compute their tax liability and submit their tax returns based on existing tax laws and policy statement issued by the tax authorities. A notice of assessment would not be issued under SAS. The tax returned by the taxpayer is deemed to be a notice of assessment. Tax return would therefore, not subject to a detailed technical scrutiny by the Inland Revenue Board (IRB) as under the formal system. The objective of this paper is to determine the demographic factors in influencing the behavior of taxpayer. Levene's test shows that there is no significant mean different between male and female, no significant mean different between government and private servnt tax knowledge score. Furthermore, there is no significant different between Chinese and Indian score, the different is only %. As the analysis goes further, Levene's test show that there is a significant mean different between Malay and Chinese