THE RELATIONSHIP BETWEEN PERCEPTIONS AND LEVEL OF COMPLIANCE UNDER SELF ASSESSMENT SYSTEM: Conclusion and Recommendation

7 Days Album Version Craig David — Greatest HitsIn term of knowledge on allowable business deduction, only have 2 out of 10 questions are significant (p value less than 0.05). The first significant question is regarding treatment of interest on loan for personal accommodation that classified as non allowable business expenses (p value = 0.015). This result shows that 84 percent (n=100) of respondents who submitted their tax return before 30 June 2008 (complied) are knowledgeable about the tax treatment of this expenses, compared to only 16 percent (n=19) of respondents who submitted after 30 June 2008 (non complied). Beside from this question, the question on whether household expenses can be classified as business deduction also have significant differences between complied respondents and non-complied respondents (p value = 0.05), where 83.9 percent of complied respondents (n=104) are knowledgeable, compared to 16.1 percent (n=20) of non-complied respondents. As conclusion, there is significant correlation between satisfaction and tax compliance. This is consistent with prior researches (Richardson, 2006; Belkoui, 2004) which suggested that taxpayers’ satisfaction will affect their willingness to comply with the tax requirements. The study also shows that complied taxpayers are more understand of the importance of the tax revenue to the economic growth of a country. Their awareness on the importance of the tax revenue might influence their decision to comply with the tax laws. In addition, when factor analysis conducted, overall satisfaction towards the services provided, time taken to process the taken return and the time taken to process the tax refund contribute to the level of satisfaction towards the services provided by the IRB.
Beside from satisfaction, knowledge on taxation also has significant influence on the decision whether to comply with the specified time required by the tax law. The results show that knowledgeable taxpayers are normally submitted their tax return within the required time, compared to less knowledgeable taxpayers. This is consistent with previous studies, such as Park & Hyun, which suggest that taxpayers are more willing to comply if they understand basic concept of taxation.
There are several limitations on this study. Firstly, the study only investigates compliance in terms of timeliness of the tax return, without considering other factor such as the accuracy of that return. Secondly, the study only conducted in three states which are Kelantan, Terengganu and Pahang. Therefore this study cannot be generalized to all the taxpayers in Malaysian in term of perception and satisfaction into tax authorities.
In order to enhance the level of compliance and level of understanding in tax knowledge of the taxpayers, the Malaysian tax administration must provides its taxpayers with the various services such as guidance, education, consultation and other. The success on the understanding of taxation depends very much on the effectiveness of the services available to educate taxpayers on the taxation process and the requirements of legislation.
The present study also triggers for more comprehensive study in the future by including all the categories of taxpayers based on their awareness and utilization of services quality of IRB involving various states in Malaysia. The future study may also look at various determination of element in services quality such as reliability, empathy, assurance, responsiveness and tangible.