Determinants of Tax Compliance among Micro Business: Malaysian Perspective

The landscape of Micro, Small, and Medium Enterprises (MSMEs) worldwide has grown considerably well since 2016 until 2021.In Malaysia, micro-businesses were prominent as they accounted for the largest share of MSMEs components.However, the majority of microbusinesses owners are operating in the informal sector and some do not even register their businesses with the government.This may lead to difficulties for the tax authority in collecting taxes from them.Therefore, this study is vital to identify what are the possible factors that influence the tax compliance of micro-businesses in Malaysia.This study focused on the influence of tax morale, simplicity, and knowledge on tax compliance.An online questionnaire was distributed to micro-business owners, and 152 micro-business owners responded.The researcher used simple random sampling technique to collect data focusing on microbusiness owners in Malaysia.This study employed the Statistical Package for the Social Sciences (SPSS) to analyse the data in order to derive useful information.Based on these 152 respondents, the study revealed that tax morale, tax simplicity, and tax knowledge have a positive and significant impact on tax compliance.The findings are crucial for the policymakers to improve the current tax policies.More effective tax education programmes should be crafted to convey tax knowledge and awareness to business owners, especially among those in the informal sector.It is advisable for future researchers to concentrate on other substantial variables that may affect tax compliance.Apart from that, the research methodology also needs to be diversified such as to include focus group discussions and field experiments to obtain more useful findings related to the issue of tax compliance among micro-business owners.