Determinants of tax compliance behaviour among Malaysian e-commerce entrepreneurs

The rapid growth of electronic commerce (e-commerce) in Malaysia has created significant challenges for tax compliance, due to the misalignment between the expansion of e-commerce and tax collection rates. Consequently, this study examines the determinants of tax compliance behaviour among Malaysian e-commerce entrepreneurs, incorporating variables from the Slippery Slope Framework (SSF), Fischer's Model (FM), and the principle of permanent establishment (PE). SSF differentiates between enforced and voluntary tax compliance behaviour (ETCB and VTCB), considering economic factors (such as tax audit rate, audit probability, and tax penalty), psychological factors (tax service), mediating role of power dynamics (coercive and legitimate power), and trust. FM incorporates demographic factors (the entrepreneur's age, business size, business duration, and income source) alongside tax complexity. The PE principle is emphasized for its importance in defining the sources of income in e-commerce. A total of 146 usable questionnaires were collected through an electronic survey and analysed using Statistical Package for the Social Sciences for direct relationships, and the PROCESS Macro for mediation effects. The findings reveal that tax audit rate and audit probability have a significant relationship with ETCB, while tax penalty, demographic factors, and PE show no significant relationship. For VTCB, both tax audit rate and tax service demonstrate significant relationships, but no significant relationships were found for audit probability, tax penalty, tax complexity, demographic factors, and PE. Mediation analysis indicates that coercive power mediates the relationship between tax audit rate, audit probability, tax penalty, and ETCB. Legitimate power and trust mediate the relationship among these factors, including tax complexity and VTCB. However, the mediating role was not found in the relationship between tax service and VTCB. This study offers valuable insights into the determinants of tax compliance behaviour among Malaysian ecommerce entrepreneurs, contributing to the academic discourse on tax compliance and providing practical implications for policymakers