A study on the impacts on tax revenue in Malaysia

Tax revenue is a critical source of government income that funds essential services and infrastructure. In Malaysia, declining tax revenue has raised concerns about the effectiveness of current tax policies and administrative processes. This study examines the impacts of electronic tax filing (e-filing), tax administration, and tax compliance on tax revenue in Malaysia. Using the Institutional Theory as a framework, this research explores how coercive, normative, and mimetic pressures influence these factors and their overall effect on tax revenue collection. A quantitative research approach was employed, gathering data through structured questionnaires distributed to taxpayers in Penang and Kedah. The study hypothesizes that e-filing simplifies tax processes, enhancing compliance and increasing revenue. It also posits that effective tax administration boosts revenue by ensuring transparency and efficiency, while improved tax compliance strengthens the tax base. Statistical analysis was conducted using Excel to test these hypotheses. The results of the study indicate a negative insignificant relationship between e-filing adoption whereas a positive significant relationship with effective tax administration and enhanced tax compliance with increased tax revenue. The findings highlight the need for continuous improvements in tax systems, particularly in promoting voluntary compliance and leveraging technology to streamline tax administration. This research provides valuable insights for policymakers aiming to enhance tax revenue through digital transformation and better administrative practices.