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Compliance risk management strategies for tax administrations in developing countries : a case study of the Malaysian revenue authority
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Mahmood, Marhaini (2012) Compliance risk management strategies for tax administrations in developing countries : a case study of the Malaysian revenue authority. PhD thesis, University of Warwick.
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Official URL: http://webcat.warwick.ac.uk/record=b2684543~S1
Abstract
The aim of this study is to achieve a better understanding of risk management as
practised by tax administrations of developed countries and to ascertain what
prevents the developing countries from managing risks efficiently and effectively.
Tax administrations are faced with challenges to ensure voluntary compliance
with the tax law. Compliance risk that is generally faced by tax administrations in
relation to the implementation of the Self-Assessment System (SAS) is further
explored. A well-designed risk management strategy enables tax administrations
to manage risks efficiently whilst reducing administrative costs in the process.
The empirical evidence indicates that, in developing countries, the level of
compliance is generally low and the administrative capability of tax agencies is
relatively poor. In an effort to increase tax compliance, tax administrations in
developing countries tend to adopt a traditional approach to their duties by
implementing a command-and-control mechanism.
The majority of tax compliance research has been written from the perspective of
taxpayers. This study, in contrast, investigates the perspective of a tax
administration in a developing country; hence the Malaysian Tax Administration,
also known as the Inland Revenue Board of Malaysia (IRBM) has been selected
as a case study. Compliance risk management by the IRBM is addressed in order
to understand the agency’s activities that are designed to encourage voluntary
compliance and manage compliance risk. This qualitative research uses
responsive regulation theory as a concept to underpin this investigation. This
study also develops a conceptual framework which combines three major themes:
tax compliance, risk management and responsive regulation. Responsive
regulation in the tax administrations of developing countries is considered a new
concept, thus warranting further study. Responsive regulation encourages a soft
approach to handling non-compliant taxpayers, resorting to a hard approach only
if taxpayers refuse to comply. Empirical data was collected through face-to-face
interviews with senior officials of the IRBM and tax practitioners in Malaysia to
elicit the interviewees’ perceptions of risk and IRBM risk management practices.
To enrich data collection, secondary data was collected from a range of published
and unpublished printed materials from the IRBM.
Findings from this study suggest that IRBM risk management strategies conform
to responsive regulation theory. Various education programmes are conducted by
the IRBM to assist and encourage voluntary compliance. The study reveals that
Malaysian taxpayers’ compliance behaviour is influenced by tax knowledge,
culture and their perceptions of the government administering the revenue.
Knowledge gained from this study would provide insights for tax administrations
in other developing countries of IRBM risk management practices in fostering
voluntary compliance and self-regulation.
Item Type: | Thesis (PhD) | ||||
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Subjects: | H Social Sciences > HJ Public Finance | ||||
Library of Congress Subject Headings (LCSH): | Taxation -- Malaysia, Revenue -- Malaysia, Tax administration and procedure -- Malaysia | ||||
Official Date: | September 2012 | ||||
Dates: |
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Institution: | University of Warwick | ||||
Theses Department: | Warwick Business School | ||||
Thesis Type: | PhD | ||||
Publication Status: | Unpublished | ||||
Supervisor(s)/Advisor: | Oats, Lynne; Tuck, Penelope | ||||
Sponsors: | Inland Revenue Board of Malaysia (IRBM) | ||||
Extent: | xi, 344 leaves. | ||||
Language: | eng |
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