Outsourcing Malaysia federal tax audit: The stakeholders’ views

Ahmad, Norsiah and Mohammed, Zakiah Muhammadun and Mohd Iskandar, Takiah and Mohd Hanefah, Hajah Mustafa and Mohd Faizal, Sellywati (2014) Outsourcing Malaysia federal tax audit: The stakeholders’ views. Jurnal Pengurusan, 41. pp. 13-24. ISSN 0127-2713

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Abstract

This study investigates the feasibility of outsourcing tax audit work in Malaysian tax system to enhance administration efficiency, to curb tax evasion and abusive avoidance, and to improve revenue collection without introducing a new tax. The current tax audit, carried out by internal auditors of Inland Revenue Board of Malaysia, could only be performed on a small numbers of taxpayers due to high administrative cost in terms of audit cost and cost to employ and train more audit personnel. Nevertheless, without tax audit, tax non-compliance activity could not be curbed and government would be at high risk of losing its revenue. One of the possible ways to increase audit work is through strategic outsourcing. However, decision to outsource tax work should be critically examined because outsourcing of tax audit is a policy that could potentially affect every taxpayer. This paper discusses the views of the stakeholders (tax authorities, the taxpayers and tax agents) on the value of tax audit outsourcing. Using a mixed method approach, this study finds contradicting opinions on the idea of implementing external tax audit in Malaysia. While the tax authorities are hesitant to the idea, the companies as tax payers and the tax agents show favorable responds to the implementation of outsourced tax audit in Malaysia.

Item Type: Article
Keywords: Outsourcing; income tax; tax audit; tax compliance; Malaysia
Subjects: H Social Sciences > HJ Public Finance
Faculty / Institute: Faculty of Law, Accountancy & International Relations
Depositing User: NORSIAH AHMAD
Date Deposited: 13 Jan 2015 02:13
Last Modified: 13 Jan 2015 02:13
URI: http://erep.unisza.edu.my/id/eprint/2828

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