Factors Underpinning Usage Behaviour of an Electronic Filing System: The Case of Malaysian Personal Taxpayers

By: Idawati Ibrahim, paper presented at the 2012 Australian Tax Teachers Association (ATTA) Conference, Sydney, 16-19 January 2012

In 2005, the income tax electronic filing (e-filing) system was introduced for personal taxpayers in Malaysia. The take-up rate of the e-filing is relatively low, though the system is generally considered better than manual filing system.  After five years of its introduction, only about 30 percent of overall Malaysian personal taxpayers used e-filing (Inland Revenue Board of Malaysia, 2010). While previous studies have emphasised factors affecting the intention to adopt the e-filing system, this paper examines factors that determine the actual usage behaviour among personal taxpayers’ towards the system. The factors tested are perceived usefulness, perceived self-ability, feeling of anxiety,  and external influence.  In 2010, mail surveys were distributed to personal taxpayers by the Inland Revenue Board of Malaysia. Drawing data from 209 useable responses, a logistic regression analysis was utilised to determine factors significantly affecting taxpayers’ actual usage behaviour of the e-filing system. The results suggest that perceived usefulness and feeling of anxiety are statistically significant and outperform the other factors in explaining the actual usage behaviour of the e-filing system among Malaysian personal taxpayers. Specifically, the likelihood of a taxpayer using the e-filing system is positively related to the perceived usefulness of the system but is negatively related to his/her feelinf of anxiety towards the system. The results may provide useful information for the government in formulating appropriate strategies to increase the take-up rates of the e-filing system among personal taxpayers in Malaysia.

Compliance Costs of Electronic Tax Filing for Personal Taxpayers in Malaysia

by: Idawati Ibrahim & Jeff Pope, paper presented at the International Conference of Management, Penang, 13-14 June 2011.

The revolution in technology is highly beneficial for tax systems. Compliance costs were reported as high and regressive in many countries and taxes. Electronic filing is an example of techniques utilizing technology aiming at reducing compliance costs of taxation. This study reports preliminary findings on estimates of compliance costs for individual taxpayers in Malaysia under the e-filing system. Mail survey was used to gather the data and was developed based on the renowned Cedric Sandford’s model. On average, it is estimated that the time spent for personal income tax system is about 9.9 hours for manual filing group and about 7.7 hours for e-filing group. Findings on time spent indicate that the median time to submit tax return is statistically less for e-filing group than manual filing group by 0.25 hours. However, the median time to gain assistance is in the opposite direction by 0.37 hours. The monetary costs related to Information Technology (IT) shows that e-filing group spent more IT costs than manual filing group. This paper makes a vital contribution towards enhancing knowledge in compliance costs literature particularly from the effect of technology and the results can serve as a basis for future analysis.

My first published paper

Ibrahim & Pope (2011) The Viability of a Pre-Filled Income Tax Return System for Malaysia Journal of Contemporary Issues in Business and Government, Volume 17, Issue 2.

Abstract:

Many countries have made various efforts to reduce tax non-compliance and the related compliance costs. These efforts include a pre-filled return system that no longer requires taxpayers to fill-up their tax return form. The aim of this paper is to examine the viability of a pre-filled return system for Malaysia. Specifically, five critical success factors suggested by the Organisation for Economic and Co-operation Development are examined in the Malaysian context. It is found that the pre-filled return system could prove viable due to the existing accurate withholding system, high integrity taxpayer identifiers and effective use of technology. The biggest challenge is posed by the need for comprehensive systems of third-party reporting to the revenue body and compatible legislative framework. The paper concludes that under the current Malaysian tax structure, a partially pre-filled return system is a more viable choice; a fully pre-filled return system is possible for higher detection of non-compliance.

Electronic Filing of Personal Income Tax Returns in Malaysia: Determinants and Compliance Costs

This is my PhD topic.