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Title: Compliance risk management strategies for tax administrations in developing countries : a case study of the Malaysian revenue authority
Author: Mahmood, Marhaini
ISNI:       0000 0004 2748 8931
Awarding Body: University of Warwick
Current Institution: University of Warwick
Date of Award: 2012
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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.
Supervisor: Not available Sponsor: Inland Revenue Board of Malaysia (IRBM)
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: HJ Public Finance