Determinants of efficetiveness of tax enforcement on aggressive tax planning cases in Malaysia

Aggressive tax planning (ATP) might be the hidden agenda between tax avoidance and tax evasion. Tax evasion is not a victimless crime as it affects the tax collection and contributes to tax loss, which in turn affects social and economic equity. It was reported that few affected countries have responded via measures of enforcement taken
as ATP gives risk to their tax base and tax loss. Malaysia has just started combatting aggressive tax planning scheme since 2016 and gives no turning back in fighting ATP schemes. This study investigated on the determinants of effectiveness of tax enforcement on ATP in Malaysia from the perspective of Inland Revenue Board of
Malaysia (IRBM), by examining the complexity of tax laws, complexity of ATP schemes, professional proficiency of officers (knowledge and skill) and the tax enforcement strategy by IRBM. This study is of significance especially to IRBM to ascertain whether the current tax enforcement mechanism is sufficient, efficient, and proficient in curbing the ATP schemes in Malaysia which will also contribute the
impact towards tax compliance in Malaysia. This study adopted the quantitative research where it employed primary data from survey questionnaires involving 119 respondents from IRBM audit and investigation officers who are responsible on ATP cases in Special Task Department and Large Taxpayer Branch at Jalan Duta, Kuala
Lumpur. The data was analysed using Statistical Package for Social Sciences (SPSS) which involved the descriptive, reliability, factor, correlation, and regression analysis. The findings of the current study showed that effective tax enforcement on ATP cases in Malaysia was strongly influenced by tax enforcement strategy, complexity of ATP
schemes and professional proficiency (knowledge and skill) of the investigation and audit officers. However, complexity of tax laws does not have a significant relationship with the effective tax enforcement on ATP cases in Malaysia.