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Determinants of Tax Evasion on Imported Vehicles

By Misman Miskam, Rohaya Md Noor, Normah Omar and Rozainun Abd Aziz


AbstractThe importance of taxation as a major public finance to developed and developing countries is non-debatable. The issue of smuggling activities related to the indirect taxation had caused a great lost to the government not only in term of monetary aspect, but also non-monetary aspects such as quotas, embargo and product quality. However, the study of a tax evasion and smuggling activities in the indirect taxation have received less attention among the researchers and legislators. Hence, the current study aims to examine factors affecting the tax evasion on excise duties for importation of vehicles that can be associated with smuggling activities in Malaysia. The study has indentified several potential determinants related to tax evasion on imported vehicles, such as the tax rate, penalty structure, the car's brand and size of the business of car importers. To achieve the objectives, this study used sample data from vehicles smuggling cases investigated by the tax authorities in Malaysia. The hypotheses were tested using both univariate and multivariate statistical methods. The statistical results provided evidence on the significant values of evaded excise duties, whereby the excise duties and penalty rates are the contributing factors for the tax evasion in vehicles smuggling activities. Hence, this study contributes towards the body of literature in the discussed area and also provides strategic information to the policymakers in reviewing the tax policy related to excise duties on imported vehicles in the future

Publisher: The Authors. Published by Elsevier Ltd.
Year: 2013
DOI identifier: 10.1016/S2212-5671(13)00236-0
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