Tax evasion exposure due to cryptocurrency transactions among income tax officers

This study aims to investigate tax evasion exposure due to cryptocurrency transactions among income tax officers. Grounded in Deterrence Theory, the research focuses on three primary objectives, to examine how the regulatory framework surrounding cryptocurrency taxation influences the awareness and knowledge of tax evasion detection and reporting behaviour among income tax officers, to identify the correlation between the level of collaboration and information sharing among income tax officers, regulatory bodies, and international tax authorities, and the awareness and knowledge of detecting and reporting tax evasion involving cryptocurrency transactions and to determine the impact of risk assessment and monitoring mechanisms, supported by technological tools and resources, on the awareness and knowledge of detecting and reporting tax evasion involving cryptocurrency transactions. Data was collected from 102 respondents through a survey and analysed using multiple regression analysis. The findings indicate that the independent variables influencing detection and reporting behaviour are the regulatory framework, collaboration, and risk assessment mechanisms. The study also found that the independent variables explain 50.2% of the variation in detection and reporting behaviour. This research investigates the impact of the Regulatory Framework (RFK), Collaboration and Information Sharing (CIS), and Risk Assessment and Monitoring (RAMM) on Deterrent Risk Behaviour (DRB) in Malaysian cryptocurrency tax evasion. RFK and CIS significantly influence DRB, with RFK being more impactful, while RAMM's effect is positive but not significant. These findings support Gibbs's Deterrence Theory, emphasizing the importance of strong regulations and collaborative information sharing in reducing tax evasion. The study offers insights for the Inland Revenue Board of Malaysia, contributing to tax policy development, government tax reform, increased compliance, and the strengthening of the tax collection system