Determinants of Tax Noncompliance among Small and Medium Enterprises in Klang Valley, Malaysia

The aim of this study was to identify the determinant of tax noncompliance among the small and medium enterprises (SMEs). The study also examine the perception of SME taxpayers toward tax penalty, company size and level of income. Tax noncompliance is defined as when the taxpayers did not comply or follow the tax rule and tax regulation set by the tax authority. The increasing value of tax noncompliance will affect the value of tax revenue to the government. The sample consists of the small and medium enterprises (SME) operators in distributive trade, service providers; and food and beverages in Klang Valley, Malaysia. The selected of this sectors because among the highest numbers SMEs operators. 150 questionnaires were distributed to the SME operators, only 86 (55.42%) respondents' agreed to participate. Statistical Package for Social Sciences (SPSS) is using to test the reliability, normality, descriptive and correlation of the respondents. The results indicated that there is/was a number of significant relationship between company size and level of income towards tax noncompliance among the SMEs. The study recommends that Inland Revenue Board of Malaysia (IRBM) management can improve the level of tax compliance by ensuring the favorable and fair tax rates especially to SME operators