Tax Literacy Rate Among Taxpayers: Evidence from Malaysia
The extent of taxpayer knowledge can have a major impact on the degree of compliance with taxation rules and regulation. Low knowledge creates uncertainty about requirements of the tax regulation and can lead to high degree of involun-tary non-compliance. This study highÂ¬lighted the importance of taxation knowledge by measuring Malaysianâ€™s tax payersâ€™ tax literacy rate taking into consideration the following criteria: 1) Individual ability to fill the tax return form indeÂ¬pendently, 2) Taxpayerâ€™s interest in learning about tax, and 3) Incident of errors in filling the tax reÂ¬turn forms. Questionnaires were used in this study to ascertain the tax liter-acy rate. The results inÂ¬dicate that among the respondents, professionals group has the highest percentage of tax literacy and the formers have the lowest percentage. Majority of the businessmen paid for services for fillÂ¬ing tax return forms and high rank officers are the highest among the group for not employing othÂ¬ers for filling the tax forms. Businessmen have the highest incidence of error in filling tax return form and most of teachers reported no error in filling such forms. Most business-men showed interests and were willing to spend time to learn about taxation. They perceived taxation knowledge as an important tool for themselves and also for their family. Overall results indicate that more than 60% of respondents are tax lit-erate. However, a significant number of them are actuallyâ€˜ functionally tax illiter-ateâ€™. Most of them thought that they knew a lot about taxation as they had read them in the tax literature sent to them by the IRB. However, the evidence was con-trary to this conjecture. The inÂ¬formation on the extent of taxpayersâ€™ knowledge is potentially useful to the tax authorities to assist them in developing effective com-pliance enhancement policies
Keywords: tax literacy rate, tax return
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JURNAL AKUNTANSI DAN AUDITING INDONESIA (JAAI)
ISSN 1410-2420 (print), 2528-6528 (online)
Published by Accounting Department, Faculty of Economics, Islamic University of Indonesia and Supported by IAI-KAPd (Ikatan Akuntan Indonesia - Kompartemen Akuntan Pendidik)
JAAI pada http://journal.uii.ac.id/index.php/JAAI/ terlisensi oleh Creative Commons Attribution 4.0 International License.