Exploring Malaysian E-Commerce Taxation: A Qualitative Insight of Online Businesses

Abstract

Electronic commerce (e-commerce) is mushrooming in today's digital world across continents. However, this phenomenon seems not reflective of the tax collected, especially from consumer-to-consumer (C2C) online business transactions. Considering this issue, this paper focuses on the area of C2C business transactions. Our aims are to determine the level of understanding of e-commerce taxation of the students who involved in online businesses during their study years, and to gauge their attitude towards implementation of e-commerce taxation in Malaysia by relating to the existing e-commerce tax rules and regulations. Using an exploratory study approach, a total of six interviews were conducted with students on whether or not their online business income was reported to the tax authority. The results suggested that there was a lack of awareness amongst students concerning the compliance of e-commerce taxation. Factors leading to non-compliance included the perceived low chance of getting caught, the insignificant amount of income being generated, and their current "students" status that camouflaged them from being subject to e-commerce tax. Apparently, they perceived that reporting their online business income to tax authority is troublesome, time wastage and pointless. However, majority of them are willing to report their income after their graduation and ready to join the job market for tax planning purposes. This paper concludes that the non-accounting and accounting students appeared to have different perceptions over the e-commerce taxation due to the level of exposure to taxation. An important practical contribution of this paper concerns the proposal of a series of taxation seminars being conducted to promote compliance and to clarify the misunderstanding that might lead to heavy penalty due to tax evasion.

Influence of Tax Knowledge and Tax Complexity on Compliance Behavior Among Sole-Proprietors

“…On the contrary, some taxpayers might have been exercising better tax planning in terms of tax avoidance if they have higher degree of tax knowledge (Bornman & Ramutumbu, 2018). However, in reference to a forementioned studies which indicate a significant relationship between tax knowledge and compliance behaviour were not consistent with a studies by Yeo, Lim & Azhar, (2019) and Newman, Charity & Ongayi, (2018). Particularly, they claimed that tax knowledge has no significant influence on taxpayers' compliance behaviour and thus knowledgeable taxpayers are not necessarily compliant.…”

“…Therefore, there is a high probability that they were not reporting cash in hand transactions and disclosing lesser revenue than they earned. Previous studies have also found that there are still many small business taxpayers with online businesses do not submit their tax returns, yet they may generate extra income without paying taxes (Yeo, Lim & Azhar, 2019).…”

Determinants of Tax Compliance Intention: A Review of Non-Economic Factors

“…Enachescu et al (2019), for example, utilised experimental mixed-method surveys to look into how tax decisions affect people's emotions. A few studies, such as Onu and Oats (2018), and Yeo et al (2019), were qualitative in nature. Their studies have uncovered hidden issues in tax compliance, particularly the reason why people intend not to comply with the tax regulations.…”

“…Besides, journal.ump.edu.my/ijim ◄ research on individual taxpayers has been done in Indonesia and Barbados by Andreas and Savitri (2015) and Alleyne and Harris (2017), respectively. Tax compliance intention issues have been studied in Malaysia (Shaharuddin et al, 2012;Palil & Rusyidi, 2013;Mohdali & Pope, 2014;Al-Mamun et al, 2014;Tallaha et al, 2014;Hassan et al, 2016;Mohamad et al, 2017;Sapiei et al 2017, & Yeo et al, 2019. The studies' discussions were from the perspectives of individual taxpayers, small business entrepreneurs, and students.…”

Formación contable y tributaria de las empresas comerciales de Riobamba: un acercamiento a la orientación técnica y profesional

“…Cabe mencionar que la educación en contabilidad y tributación es fundamental para las empresas comerciales en el Ecuador ya que les ayuda a cumplir con sus obligaciones tributarias y contables y a tomar decisiones informadas y estratégicas en base a su situación financiera (Yeo et al, 2019). En el país, las empresas comerciales están sujetas a una variedad de leyes y reglamentos contables y fiscales.…”