Influential Factors of Tax Evasion Among Micro, Small, and Medium Enterprises (MSME) Owners in Malaysia

Taxation is a means to collect money from the people of the country, and tax revenue is one of the main sources of income for the government. Tax evasion is a common practice in most countries and ways of minimising it has been a continuous challenge for most governments. Generally, tax evasion is an illegal method of tax avoidance and concerted efforts should be given to curb such actions in the country to ensure justice and equity for the taxpayers. The study aims to identify the factors that may cause tax evasion among the Malaysian Micro, Small, and Medium Enterprises (MSME) owners. A quantitative empirical study was pursued, using validated questionnaire for the collection of data. The non-probability sampling method was used to collect data from 159 respondents. Both the SPSS Version 27 and Smart PLS 4 were used for analysing the data. The results show that tax morale, tax fairness, tax complexity, and attitude towards tax evasion have a significant relationship with tax evasion. However, tax knowledge did not show a significant relationship with tax evasion. The findings from the study may provide valuable insights for policymakers and tax authorities to consider various strategies to reduce tax evasion. Future studies could possibly increase the respondents as well as other constructs.