Factors affecting tax knowledge among Malaysian SMEs

Tax compliance is a major concern among many governments in the world. The issue of tax compliance has long being discuss. Past studies have shown that there has always been a reluctant among taxpayers to pay taxes. The Small and Medium Enterprises (SMEs) has known to be a tough party when it comes to pay taxes as discussed in few literatures. Though the number of SMEs is growing, tax collection from this sector is still low. Thus, this paper aims to determine factors affecting tax compliance among Malaysia’s SMEs. This study was conducted using questionnaires, with participation of 93 tax auditors in Inland Revenue Board of Malaysia (IRBM) throughout Malaysia. Results shows that the respondents believe in perception that tax knowledge play the important role in taxpayers’ compliance. Attitudes, subjective norms, penalty and punishment as well as fairness were found to be the most influential. It is therefore, recommended that efforts be made to improve the taxpayers’ knowledge to improve tax compliance and consequently improve government revenue generation.