The Effect of Age on Personal Income Tax Compliance: A Case of Youth in Malaysia

Abstract

This paper aims to examine age factor and its effects on personal income tax compliance in Malaysia. A quantitative approach utilising secondary data obtained from Inland Revenue Board Malaysia and Malaysian Department of Statistics, from the years 2002 to 2017 were used to generate the results, with validated secondary data that consist of individual income tax revenue and the youth age between 15 to 39 years old. All proposed hypotheses were tested using the EViews software. The study proposed five hypotheses and the data supported most of them with a significant of 5%. Results from the study indicate that age between 15 to 19 years old and 30 to 34 years old have negative effect on personal income tax compliance. However, age between 20 to 29 years old have contributed to a positive effect on the personal income tax revenue. While age between 35 to 39 years old was insignificant to individual income tax revenue in the context of Malaysia. Several theoretical and practical indications, as well as limitations of the study for future research, have been outlined.

Factors Influencing Tax Compliance From The Perspective Of Young Workers: Evidence From Malaysia

“…This socio-psychological aspect of the public can encourage more voluntary compliance rather than enforced compliance achieved through pure economic measures. Among the public segments that potentially have a high level of non-compliance and relatively low tax morale are youths, who arguably have a low sense of responsibility towards society as a whole (That et al, 2022;Ali & Ahmad, 2014;Wearing & Headey, 1997). Young workers tend to exhibit low levels of tax compliance due to a lack of knowledge about tax laws and regulations.…”

“…Nevertheless, young workers tend to have a rather different perception of tax compliance compared to older people. This is because young workers are less sensitive to penalties that will be imposed on non-compliance behaviour rather than older people (That et al, 2022;Chau & Leung, 2009). Besides, youth workers are also employees who have just begun to establish their careers.…”