Tax knowledge for the digital economy

Abstract

Orientation: Because of the digital economy, taxpayers have access to new income streams. These virtual transactions have taxation consequences, and therefore taxpayers need specialised taxation knowledge to understand their tax obligations and act in a tax compliant manner.Research purpose: The aim of this article was to identify the unique tax knowledge requirements for individuals functioning in the digital economy by systematically reviewing literature on the tax challenges arising from this new economy. Applying a conceptual framework of tax knowledge, these knowledge requirements were categorised as either general, procedural or legal. By identifying these requirements, it was possible to point out the risks within these categories that may cause obstacles to individuals to act fully tax compliant.Motivation for the study: Understanding the different knowledge requirements of taxpayers may assist tax authorities to identify the tax compliance risks of these taxpayers in their capacity as individuals functioning in the digital economy.Research approach/design and method: A qualitative approach was used in the study through a thematic search of appropriate literature such as articles, reports, blogs and media releases. These documents were systematically reviewed to identify the knowledge requirements for individual taxpayers functioning in the digital economy.Main findings: The findings suggest that there are specific tax knowledge requirements in different areas that must be in place to ensure tax compliance in the digital economy. Any shortcomings in these areas of knowledge create the risk of non-compliance for individuals functioning in the digital economy.Practical/managerial implications: Taxpayers and tax authorities alike should take note of the risk areas identified in each area of knowledge (general, procedural and legal) and devise strategies to deal with taxation issues arising from transactions in the digital economy.Contribution/value-add: This study applied a tax knowledge framework and identified the general, procedural and legal tax knowledge requirements of individuals functioning in the digital economy. The study also pointed out associated compliance risks, which may assist tax authorities to target strategies for improving taxpayer knowledge in these three areas.

Does Tax Knowledge Motivate Tax Compliance in Malaysia?

“…Similar results were received by Lewis (1982) explains that tax knowledge correlates negatively with tax compliance behaviour. However, these results contradict many other research outcomes in those researchers found that positive correlation exists between tax knowledge and tax compliance behavior (Harris, 1989;Singh, 2003;Singh and Bhupalan, 2001;Mohamad Ali et al 2007;Wassermann & Marina, 2020). Malaysian thinking that it takes hard work to meet the basic needs and looking closely to find ways to control costs since tax knowledge has a negative association with tax compliance behavior in Malaysia.…”

“…When considering the attitudes of individual taxpayers, the tax law knowledge is essential. (Manual & Xin, 2016;Wassermann & Marina, 2020) and tax knowledge forms a significant positive association with tax compliance level (Mukhlis et al, 2015). Despite the fact that limited research focusing on tax knowledge, it has been found that education do shows a vital role since the application of the Self-Assessment System that required personal tax knowledge (Kasipillai et al, 2003;Harijito, 2005).…”

Tingkat Literasi Pajak Penghasilan Orang Pribadi Dan Determinannya (Studi Di Jakarta, Bogor, Depok, Tangerang, Dan Bekasi)

“…Literasi pajak berkorelasi positif dengan kepatuhan pajak (Bornman and Wassermann, 2019). Oleh karena itu, literasi pajak perlu ditingkatkan untuk meningkatkan kepatuhan Wajib Pajak (Susyanti dan Anwar, 2020) .…”

“…Knowing that something is taxable merupakan pemahaman WP tentang ketentuan hukum dan Undang-Undang Perpajakan dan mengetahui bahwa ada sesuatu yang dikenakan pajak (Bornman and Wassermann, 2019). Dengan memahami dan mengetahui cara menerapkan ketentuan hukum perpajakan yang berlaku (Bornman dan Wassermann, 2019) akan terdapat kecenderungan bagi WP untuk memeriksa kembali penghitungan pajak terutangnya sehingga semakin tinggi tingkat literasinya.…”

“…Sementara knowing how berkaitan dengan pengetahuan dan kemampuan WP untuk menerapkan cara penghitungan pajak (Bornman and Wassermann, 2019), termasuk memahami hak dan kewajibannya sebagai WP. Menurut Damajanti dan Karim (2017) terdapat 3 (tiga) unsur pengetahuan pajak yang harus dimiliki WP untuk melaksanakan kewajiban perpajakannya agar sesuai dengan hukum pajak yang berlaku, yaitu pengetahuan menghitung, membayar, dan melaporkan pajak.…”