Regressivity of the corporate taxpayers’ compliance costs

This study evaluates the regressivity of taxpayers’ compliance costs with the corporate income tax reporting requirements.Compliance costs as a percentage of sales turnovers, ranged from 0.057% of the smallest company to 0.001% of the largest company. Larger companies were generally found to have greater compliance costs than their smaller counterparts, but as a percentage of sales, these costs were greater for smaller corporations. This study adds to the growing body of international literature concerning the distribution of compliance costs burden.Findings from these research activities should lead to the progression of more effective and efficient tax policies and practices

Tax Avoidance, Corporate Governance and Firm Value in The Digital Era

In this study, we examine the link between tax avoidance and firm value and identify the moderating effect of corporate governance in this digital era. Corporate tax avoidance activities have been considered as value-enhancement activities to the companies and better quality of corporate governance would positively related to firm value. This study uses a sample of Malaysian Public Listed Companies (PLCs) which ranked the top 100 companies of good disclosure in the Malaysia-ASEAN corporate governance report 2014. It was conducted using cross-sectional data by observing a final sample of 82 PLCs at one point in time. We provide evidence from Malaysia that corporate tax avoidance behaviour would actually reduce firm value and corporate governance has moderator effect on the relationship of tax avoidance and firm value. This study offers practical insights to the government and policymakers in understanding the tax avoidance behaviour of company and it helps in forming adequate and effective taxation system in Malaysia. We also give constructive apprehension to Malaysian companies to understand the negative consequences of corporate tax avoidance when engaging in tax planning activities aggressively. Most importantly, this study added more evidence to the stream of literature that investigates the role of tax avoidance strategies, as moderated by the level of corporate governance, in determining the firm value in this era of technology

Financial accounting and reporting 2

This book caters for degree students pursuing accounting and business courses at institutions of higher learning. Aligned with the framework-based teaching of International Financial Reporting Standards (IFRS) pedagogy, this comprehensive book contains 10 chapters that build on the knowledge and skills introduced in Financial Accounting and Reporting 1. It exposes students to more complex items, while exploring topics such as property, plant and equipment, inventory, intangible assets, investment property, biological assets, financial instruments, leases, deferred tax, introduction to group accounts, as well as impairment of assets. Students are guided in a systematic and progressive manner to acquire the required technical competencies in MFRS. The discussions are aptly punctuated with relevant worked examples to enhance the students’ understanding of various concepts and issues, and how these are related to the conceptual framework. They are also provided with ample review questions, application exercises and case studies to assess and reinforce their learning

Evaluation of corporate income tax compliance costs and compliance behaviour under the self-assessment system

Commitment to compliance may cause taxpayers to experience unnecessary compliance costs burden resulting in non-compliance behaviour. This study evaluates the tax compliance costs of corporate taxpayers and their compliance with the corporate income tax (CIT) reporting requirements under the Self-Assessment System (SAS) environment. Tax compliance costs, corporate characteristics, tax attitudinal aspects and the likely compliance behaviour of public listed companies (PLCs) are integrated into a single study, which represents a unique combination of research. A quantitative approach was adopted, whereby data was collected through a self-administered questionnaire survey method. Two types of respondents were utilised, namely corporate taxpayers and external tax professionals, for richness of data and as a measure of consistency. The mean CIT compliance costs estimate for the year of assessment 2009 is MYR47,126 per company, accounting for approximately MYR0.01 per sales turnover. The mean estimate of this study is 31.5 percent lower when compared to the findings of similar Malaysian pre-SAS study. The aggregated total compliance costs is almost MYR32 million representing 0.11 percent of corporate tax revenue and 0.01 percent of Malaysian gross domestic product (GDP). The magnitude of CIT compliance costs estimate is low compared to similar estimates in other countries. Nevertheless, the normal regressivity of tax compliance costs, in relation to company size, is evident which corroborates the findings of all existing studies. Major components of compliance costs relate to tax computation work (74 percent) and there is a heavy reliance on external sources (63 percent). Business size and estimated tax liability are the significant determinants for the magnitude of tax compliance costs burden for PLCs. The portion of tax incentives and psychological costs to the mean tax compliance costs incurred by large corporations are approximately seven and 18 percent, respectively. This study also provides empirical evidence in the context of linking between compliance burden of the tax system and compliance behaviour from the large corporate taxpayers’ perspective. Tax compliance costs burden appears to have an impact on the likelihood of non-compliance behaviour, though it is not statistically significant at the 10 percent level. The findings further reveal that the length of time companies have been operating, estimated tax liability and perceptions on complexity in the tax systems, are factors that significantly influence all types of non-compliance, namely under-reporting of income, over-claiming of expenses and overall non-compliance. The remaining corporate characteristics and attitudinal aspects examined, specifically business size, business sector, tax rate structure, tax deterrence sanction, tax law fairness and tax psychological costs, are significant determinants in at least one type of the non-compliance behaviour. This study adds to the growing body of international literature concerning taxpayer compliance costs burden, and to a lower extent, the link between tax compliance costs and tax compliance behaviour. Tax compliance costs and compliance behaviour are clearly important areas of research that have implications for both corporate taxpayers and policy makers. Findings from these research activities should initiate and lead to the progression of more effective and efficient tax policies and practices

Evaluation of corporate income tax compliance costs and compliance behaviour under the self-assessment system

Commitment to compliance may cause taxpayers to experience unnecessary compliance costs burden resulting in non-compliance behaviour. This study evaluates the tax compliance costs of corporate taxpayers and their compliance with the corporate income tax (CIT) reporting requirements under the Self-Assessment System (SAS) environment. Tax compliance costs, corporate characteristics, tax attitudinal aspects and the likely compliance behaviour of public listed companies (PLCs) are integrated into a single study, which represents a unique combination of research. A quantitative approach was adopted, whereby data was collected through a self-administered questionnaire survey method. Two types of respondents were utilised, namely corporate taxpayers and external tax professionals, for richness of data and as a measure of consistency. The mean CIT compliance costs estimate for the year of assessment 2009 is MYR47,126 per company, accounting for approximately MYR0.01 per sales turnover. The mean estimate of this study is 31.5 percent lower when compared to the findings of similar Malaysian pre-SAS study. The aggregated total compliance costs is almost MYR32 million representing 0.11 percent of corporate tax revenue and 0.01 percent of Malaysian gross domestic product (GDP). The magnitude of CIT compliance costs estimate is low compared to similar estimates in other countries. Nevertheless, the normal regressivity of tax compliance costs, in relation to company size, is evident which corroborates the findings of all existing studies. Major components of compliance costs relate to tax computation work (74 percent) and there is a heavy reliance on external sources (63 percent). Business size and estimated tax liability are the significant determinants for the magnitude of tax compliance costs burden for PLCs. The portion of tax incentives and psychological costs to the mean tax compliance costs incurred by large corporations are approximately seven and 18 percent, respectively. This study also provides empirical evidence in the context of linking between compliance burden of the tax system and compliance behaviour from the large corporate taxpayers’ perspective. Tax compliance costs burden appears to have an impact on the likelihood of non-compliance behaviour, though it is not statistically significant at the 10 percent level. The findings further reveal that the length of time companies have been operating, estimated tax liability and perceptions on complexity in the tax systems, are factors that significantly influence all types of non-compliance, namely under-reporting of income, over-claiming of expenses and overall non-compliance. The remaining corporate characteristics and attitudinal aspects examined, specifically business size, business sector, tax rate structure, tax deterrence sanction, tax law fairness and tax psychological costs, are significant determinants in at least one type of the non-compliance behaviour. This study adds to the growing body of international literature concerning taxpayer compliance costs burden, and to a lower extent, the link between tax compliance costs and tax compliance behaviour. Tax compliance costs and compliance behaviour are clearly important areas of research that have implications for both corporate taxpayers and policy makers. Findings from these research activities should initiate and lead to the progression of more effective and efficient tax policies and practices

Do religiosity, gender and educational background influence zakat compliance? The case of Malaysia

Purpose: The purpose of this paper is to examine the influence of religiosity, gender and Islamic educational background of Muslims on zakat compliance. It also aims to identify which dimensions of religiosity are significantly related to zakat compliance. Design/methodology/approach: The study uses a self-administered questionnaire that was distributed to working Muslims individuals in Klang Valley, Malaysia. Analysis of the data was based on 690 usable questionnaires. Findings: The findings show that religiosity had a significant influence on zakat compliance and three dimensions of religiosity, namely obligation, virtues and vices, and optional ritual, were significantly related to zakat compliance. Gender was also significantly related to zakat compliance, but in a negative direction, suggesting that Muslim working females are less compliant to zakat obligations compared to their male counterparts. It is found that formal Islamic educational background had no significant influence on zakat compliance. Practical implications: Given the importance of zakat collection to the growth of the economy and society, the findings of this paper might provide some insights to Muslim-majority countries and zakat institutions which areas require more attention to encourage zakat payment among Muslims. Originality/value: Compared to prior zakat studies, the findings of this study were derived from a larger sample size of Muslim working respondents. Furthermore, this study also identifies which dimensions of religiosity are significantly related to zakat compliance. Hence this study enriches the scarce literature on zakat and religiosity

Some observations on mandatory disclosure practices of Malaysian public Listed companies

This study investigates the mandatory disclosure practices evident in the annual reports of Malaysian public listed companies. Our findings show that none of the examined companies fully met the mandatory disclosure requirements even though the companies’ management had declared that the financial statements were prepared in accordance with the approved accounting standards. We also observed an inappropriate usage of ‘boilerplate’ practice in the preparation of financial statements, whereby the companies disclosed certain information that was irrelevant to their circumstances. This study has shown that to assume that companies will fully comply with mandatory disclosure requirements may not be necessarily true and, second, merely adopting International Financial Reporting Standards may not automatically lead to increased transparency

Model of good corporate governance: a study of commercial banks in ASEAN5

Due to the increasing roles of bank governance after the Global Financial Crisis, Basel III gives great emphasis on the role of the board of directors in ensuring a long‐term survivability of the banking industry. This study aims to examine the relationship between board structures, board monitoring and board diversity towards the efficiency of selected commercial banks in ASEAN5 from 1998 to 2012. This study focuses on the directors’ characteristics and diversity, which are essential elements of a sound corporate governance framework. Ultimately, this study seeks to develop a model of corporate governance that can contribute to a superior banks’ performance in this region. The Data Envelopment Analysis (DEA) model will be employed to estimate the profit efficiency scores of the selected commercial banks. The profit efficiency score is a better measure of bank’s performance than financial ratios because it takes into consideration the utilization of inputs in achieving a given level of profit. Besides, this study will employ panel data estimation based on Tobit Regression and Structural Equation Modeling to investigate the relationship between board structures, monitoring and diversity towards the efficiency of commercial banks in ASEAN5

Gender diversity, board monitoring and bank efficiency in ASEAN-5

We examine the effect of gender diversity and board monitoring (board size and independence) on bank efficiency. Using a broad panel of ASEAN-5 listed commercial banks over the period 1999-2012, we observe that gender diversity in bank board decreases cost and profit efficiency. This finding confirms our concern that the appointment of female directors in bank board is merely to comply with regulatory requirement and the market for high performing women directors could be limited, particularly in the banking sector. Our result also shows that board independence increases bank efficiency, suggesting that higher ratio of independent directors is related to the board ability to monitor and advise management; thus improving efficiency. However, we find that board independence confounded the negative effect of gender diversity on bank efficiency. This finding suggests that the inclusion of women independent directors in bank board fails to mitigate the negative effect of gender diversity on bank efficiency. Alternatively, the positive effect of an independent director towards monitoring and advisory roles of the board weakens if the director is a woman. Further, we find a U-shaped relation between board size and bank efficiency. Banks exhibit decreasing return to scale with small board size, and when the board size multiply the banks started to have better efficiency level. Our result casts doubt on most extant literature that asserts that one board size (either small or large) is always the way to go for all organizations

Knowledge assets, capabilities and performance measurement systems: a resource orchestration theory approach

Purpose: The pivotal role of knowledge management (KM) and its extensive implications have been debated in the academic literature with insufficient focus on its link to particular organizational control mechanisms such as performance measurement systems (PMS). To bridge this gap and building on resource orchestration theory, this paper aims to investigate the relationships between KM factors, PMS and corporate performance. Design/methodology/approach: Based on a survey data set of 92 listed companies in Iran, the framework and hypotheses were tested using structural equation modeling (SEM) based on partial least squares (PLS). Findings: The SEM-PLS results indicate that knowledge assets are significantly associated with both PMS and corporate performance while knowledge process capabilities (KPC) are not significantly associated with PMS and corporate performance. This study also shows that PMS mediates the relationship between knowledge assets and corporate performance. Practical implications: The results suggest that the use of appropriate management control systems plays an effective role in synchronizing, aligning and orchestrating a company’s various knowledge resources, which, in turn, can lead to superior overall performance. Originality/value: Building on a unique synthesis of resource orchestration theory and the knowledge-based view of the firm, the results of this study provide the first empirical evidence on how PMS intervenes in the relationship between knowledge resources (knowledge assets and KPC) and corporate performance