ISSN: 2222-6990
Open access
The importance of small and medium enterprises (SMEs) as the backbone in contributing to national income in Malaysia is undoubted. However, the Inland Revenue Board of Malaysia (IRBM) had reported statistical evidences pertaining to tax non-compliance among SMEs’ owners. Despite its importance, their tax non-compliance behaviour has not been given enough attention, particularly on their owners. Therefore, this study empirically investigates the influence of guilt-minimisation of SMEs’ owners on their tax non-compliance intention. This study applies Theory of Neutralisation in order to determine the relationship between the constructs of guilt-minimisation and tax non-compliance intention. Employing survey design, questionnaires were randomly distributed to 580 SME owners in Malaysia, with 72.8 percent response rate. The data collected were analysed by using PLS-SEM statistical tool. Findings reveal that denial of injury, denial of victim, condemn the condemner and appeal to higher loyalties positively influence tax non-compliance intention, whereas denial of responsibility negatively influences tax non-compliance intention. This study is expected to provide meaningful contributions to the government and tax authorities at enhancing the tax administration and increasing taxpayers’ level of compliance. Suggestions for future researchers are also highlighted.
Ajzen, I. (2006). Constructing a TPB Questionnaire: Conceptual and Methodological Consideration. http://people.umass.edu/~aizen/pdf/tpb.measurement.pdf
Alleyne, P., & Harris, T. (2017). Antecedents of taxpayers’ intentions to engage in tax evasion: evidence from Barbados. Journal of Financial Reporting and Accounting, 15(1), 2–21.
Barlow, J. B., Warkentin, M., Ormond, D., & Dennis, A. R. (2013). Don’t make excuses! Discouraging neutralization to reduce IT policy violation. Computers & Security, 39, 145–159.
Beck, L., & Ajzen, I. (1991). Predicing dishonest actions using the Theory of Planned Behaviour. Journal of Research in Personality, 25, 285–301.
Belinda, M. Y., & Hidayat, H. (2018). Academic cheating behavior reviewed from neutralization of cheating behavior and gender of the accounting students at Universities in Batam. Journal of Applied Managerial Accounting, 2(2), 154–161.
Benson, M. L. (1985). Denying the guilty mind: accounting for involvement in a white collar crime. Criminology, 23(3), 583–607.
Bernama. (2022). KDNK PKS Perlahan Berbanding KDNK PKS Malaysia. Harian Metro Online. Retrieved on March 1, 2023 from https://www.hmetro.com.my/bisnes/2022/07/865595/kdnk-pks-perlahan-berbanding-kdnk-malaysia#:~:text=%22Sumbangan%20PKS%20kepada%20KDNK%20mengecil,KDNK%20PKS%20meningkat%20kepada%20RM572.
Bobek, D. D., & Hatfield, R. C. (2003). An investigation of the Theory of Planned Behavior and the role of moral obligation in tax compliance. Behavioural Research in Accounting, 15, 13–38.
Boudon, R. (2009). Rational Choice Theory. In B. S. Turner (Ed.), Social Theory (pp. 179–195). Blackwell Publishing Ltd.
Cheng, L., Li, W., Zai, Q., & Smyth, R. (2014). Understanding personal use of the Internet at work: An integrated model of neutralization techniques and general deterrence theory. Computers in Human Behaviour, 38, 220–228.
Chin, W. W. (1998). The partial least squares approach to structural equation modeling. In G. A. Marcoulides (Ed.), Modern methods for business research (pp. 295–336). Lawrence Erlbaum Associates.
Ching, S. P. (2013). Determinants of tax non-compliance in Malaysia. MBA Research Project, Universiti Tunku Abdul Rahman.
Cohen, J. (1988). Statistical Power Analysis for the Behavioral Sciences. Lawrence Erlbaum.
Gold, A. H., Malhotra, A. and Segars, A. H. (2001). Knowledge management: An organizational capabilities perspective. Journal of Management Information Systems, 18(1), 185–214.
Hair Jr, J. F., Hult, G. T. M., Ringle, C. M., and Marko, S. (2017). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM) (2nd Ed.). Sage Publication.
Hamid, S. A. (2013). Tax compliance behaviour of tax agents: A comparative study of Malaysia and New Zealand. PhD Thesis, University of Canterbury, New Zealand.
Harrington, S. J. (1996). The effect of codes of ethics and personal denial of responsibility on computer abuse judgments and intentions. MIS Quarterly, 20(3), 257–278.
Harris, L. C., & Dumas, A. (2009). Online consumer misbehaviour: An application of neutralization theory. Marketing Theory, 9(4), 379–402.
Hinduja, S. (2007). Neutralization theory and online software piracy: An empirical analysis. Ethics and Information Technology, 9(3), 187–204.
Inland Revenue Board of Malaysia (2017). Annual Report 2016. Kuala Lumpur: The Inland Revenue Board of Malaysia. Retrieved February 26, 2018, from http://www.hasil.org.my.
Koay, K. Y. (2018a). Understading consumers’ purchase intention towards counterfeit luxury goods: An integrated model of neutralisation techniques and perceived risk theory. Asia PAcific Journal of Marketing and Logistics, 30(2), 495–516.
Koay, K. Y. (2018b). Understading consumers’ purchase intention towards counterfeit luxury goods: An integrated model of neutralisation techniques and perceived risk theory. Asia Pacific Journal of Marketing and Logistics, 30(2), 495–516.
Krejcie, R. V., & Morgan, D. W. (1970). Determining sample size for research activities. Educational and Psychological Measurement, 30, 607–610.
Kuria, J., & Omboi, D. (2016). Taxpayers’ attitudes and tax compliance behaviour in Kenya: A survey of top 100 SMEs. IOSr Journal of Business and Management, 18(6. Ver. II), 61–70.
Kvalnes, O. (2014). Honesty in projects. International Journal of Managing Projects in Business, 7(4), 590–600.
Kvalnes, O. (2019). Moral reasoning at work: Rethinking ethics in organizations (2nd Ed.). Springer.
Langham, J. A., Paulsen, N., & Hartel, C. E. J. (2012). Improving tax compliance strategies: Can the Theory of Planned Behavior predict business compliance. EJournal of Tax Research, 10(2), 364–402.
Li, W., Cheng, L., & Dalian, L. (2013). Effects of neutralization techniques and rational choice theory on internet abuse in the workplace. PACIS. https://pdfs.semanticscholar.org/4eff/5875bd7e65031e515e5f173a9b6974cc50e5.pdf
McGregor, S. L. (2008). Conceptualizing immoral and unethical consumption using neutralization theory. Family and Consumer Sciences Research Journal, 36(3), 261–276.
Murphy, R. (2011). The cost of tax abuse: A briefing paper on the cost of tax evasion worldwide. The Tax Justice Network.
Newman, W., Mwandambira N., Charity, M., & Ongayi, W. (2018). Literature review on the impact of tax knowledge on tax compliance among small medium enterprises in a developing country. International Journal of Entrepreneurship, 22(4), 1–15.
Palil, M. R. (2010). Tax knowledge and tax compliance determinants in self assessment system in Malaysia. The University of Birmingham.
Robinson, S. L., & O’Leary-Kelly, A. M. (1998). Monkey see, monkey do: The influence of work groups on the antisocial behavior of employees. Academy of Management Journal, 41(6), 658–672.
Roth, J. A., Scholz, J. T., & Whitte, A. D. (1989). Taxpayer compliance: An agenda for research. University of Pennsylvania Press.
Saad, N. (2011). Fairness perceptions and compliance behaviour: Taxpayer’s judgements in self-assessment environments. PhD Thesis, University of Canterbury, New Zealand.
Saad, R. A. (2010). Gelagat kepatuhan zakat perniagaan di negeri Kedah. PhD Thesis, Universiti Utara Malaysia.
Salleh, S. M. (2011). Faktor penentu niat kepatuhan cukai jualan tempatan. Universiti Utara Malaysia, Sintok.
Silic, M., Barlow, J. B., & Back, A. (2017). A new perspective on neutralization and deterrence: Predicting shadow IT usage. Information & Management, 54(8), 1023–1037.
Siponen, M., & Vance, A. (2010). Neutralization: New insights into the problems of employee information systems security policy violations. MIS Quarterly, 34(3), 487–502.
Small and Medium Enterprise Corporation Malaysia. (2021). SME Insights 2019/20. Kuala Lumpur: The Small and Medium Enterprise Corporation Malaysia. Retrieved January 10, 2022, from https://www.smecorp.gov.my/index.php/en/component/content/article/191-laporan-tahunan/4323-sme-insights-2019-20?layout=edit.
Smart, M. (2012). The application of the Theory of Planned Behaviour and Structural Equation Modelling in tax compliance behaviour: A New Zealand study. University of Canterbury, New Zealand.
Sudiartana, I. M., & Mendra, N. Y. P. (2018). Taxpayer compliance in SMEs sector: A Theory of Planned Behavior. Jurnal Keuangan Dan Perbankan, 22(2), 219–230.
Sykes, G. M., & Matza, D. (1957). Techniques of neutralization: A theory of delinquency. American Sociological Review, 22(6), 664–670.
Thurman, Q. C., John, C. S. & Riggs, L. (1984). Neutralization and Tax Evasion: How effective would a moral appeal be in improving compliance to tax laws? Law & Policy, 6(3), 309–327.
Torgler, B., & Schneider, F. G. (2006). What Shapes Attitudes Toward Paying Taxes? Evidence from Multicultural European Countries. In Working Paper Series.
Wahyuni, M. A., Julianto, I. P., & Dewi, N. W. Y. (2019). The examination of tax evasion behaviour of tax payers from the perspective of Planned BehaviorTheory. Advances in Economics, Business and Management Research, 69, 45–51.
Welch, M. R., Xu, Y., Bjarnason, T., Petee, T., O’Donnell, P. & Magro, P. (2005). “But everybody does it...”: The effects of perceptions, moral pressure and informal sanctions on tax cheating. Sociological Spectrum, 25(1), 21–25.
Zakaria, M., Ahmad, J. H., & Noor, M. W. (2013). Tax evasion: A financial crime rationalized? Scientific Research Journal, 1(2), 1–4.
In-Text Citation: (Radzi & Ariffin, 2023)
To Cite this Article: Radzi, N. Z. M., & Ariffin, Z. Z. (2023). Guilt-minimisation and Tax Non-compliance Intention among Small and Medium Enterprise Owners in Malaysia. International Journal of Academic Research in Business and Social Sciences, 13(7), 1205 – 1220.
Copyright: © 2023 The Author(s)
Published by HRMARS (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode