Increasing Tax Compliance Behaviour Through Accommodative Approaches and Tax Rewards

Abstract

The present paper uncovers the role of tax rewards and other determinants in increasing tax compliance behaviour in Malaysia. Focus is given to the accommodative approach, a ‘softer’ approach than the deterrence approach. Seven strategies are examined: tax education, treatment by the tax authority, Special Voluntary Disclosure Programme (SVDP), which are the Inland Revenue Board Malaysia (IRBM’s) current strategies together with four forms of proposed tax rewards which are cash vouchers, lucky draw, certificate of appreciation and privilege card. From a survey of 501 respondents, the results suggest that IRBM’s two current strategies (treatment by the tax authority; SVDP) have a significant positive relationship with tax compliance behaviour. Adversely tax education is found insignificant, proposing to IRBM to amend and improve their tax education programme. In addition, this study suggested implementing tax rewards in nonmaterial form as one of the strategies since the privilege card appears to influence tax compliance behaviour positively. The findings of this study provide significant and valuable input to IRBM in evaluating current compliance strategies and the proposal of embedded tax rewards as strategies to cultivate tax compliance behaviour