THE RELATIONSHIP BETWEEN PERCEPTIONS AND LEVEL OF COMPLIANCE UNDER SELF ASSESSMENT SYSTEM: Factor Analysis

The Bartlett’s Test of Sphericity has been used to determine either there is correlation between all the items for running the factor analysis. Based on the result, significant level is less than p <0.05 indicates that all the items are useful to using factor analysis. Besides that, Kaiser-Meyer-Olkin Measure of Sampling Adequacy (KMO) test also has been used to determine either multicollinearity problem exists between items when running factor analysis. The result shows that the value of KMO is more than 0.50 which is 0.797. The results of the KMO and Bartlett’s Test, which indicates that all items are useful and no multicollinearity exist in factor analysis.
The factor analysis results. Out of 10 questions, we find that 4 factor shows the value more than 1 which is influences the level of satisfaction towards services provided by the Inland Revenue Board (IRB) to the taxpayers. From the 4 factors, the rotation sums of squared loadings is shows 67.80 percents that satisfied with services provided to them as taxpayers. Another 6 factors only show 32.20 percent of dependent variable variance contributes to the level of satisfaction to taxpayers. All this 4 factors show the percent of variances contribution more than 5 percent which are component 1 (35.04 percent), component 2 (11.73 percent), component 3 (10.74 percent) and component 4 (10.29 percent). However, based on the result, out of 4 factor that influence to the level of satisfaction towards services provided by IRB to the taxpayers only 3 factors have relationship between levels of satisfaction and levels of compliance which is p value less than 0.05. Therefore, these findings accept hypothesis H1 which predicted that there is significant relationship between level of satisfaction provided by the IRB and tax compliance.
Finally, our next objective is to measure the relationship between level of knowledge on self assessment system with level of compliance in Pahang, Terengganu and Kelantan. Chi-square statistic has been used as depicted in Figure 2. The study analyzes the level of knowledge regarding tax personal relief among the taxpayers. Analysis on their knowledge regarding business deduction also has been conducted since most of our respondents are in the category of business income taxpayers under Section 4(a), Income Tax Act 1967.
In term of tax relief, 4 out of 10 questions regarding knowledge on tax relief are significant, with p value less than 0.05, hence hypothesis H2 is accepted. The first significant question which is regarding knowledge on self relief (p value = 0.000) which shows that 81.8 percent (n=130) of respondents who submitted before 30 June 2008 (comply) are aware about the relief, compared to only 18.2 percent of respondents who submitted after 30 June 2008 (non-comply) that aware about the relief. Then, the second significant questions are regarding knowledge on wife relief (p value = 0.003) which shows 82.9 percent of respondents that complied with the time requirement are aware about the relief (n=121), compared to only 17.1 percent of non complied respondents who are aware about the relief (n=25).
The third significant question is regarding tax knowledge on life insurance and EPF relief (p value =0.003). The result shows that complied respondents are more understand about this relief with 84.2 percent (n=123) answer “Yes”, compared to only 15.8 percent (n=23) for non- complied respondents. The fourth significant questions are regarding knowledge on books and magazines relief (p value =0.018). From the result, 84 percent of complied respondents understand this relief (n=105), compared to only 16 percent (n=20) of non-complied respondents who are aware of the relief.

Figure-2