Tax compliance behaviour of tax agents: a comparative study of Malaysia and New Zealand.
Degree GrantorUniversity of Canterbury
Degree NameDoctor of Philosophy
Tax agents have important roles in tax systems as both advocates for their clients and intermediaries for the tax authorities. The roles of tax agents are becoming more challenging with the changes in the tax landscape, such as with the implementation of the self-assessment systems (SAS) which transfers more responsibility to taxpayers to comply with their tax obligations and who in turn, rely on tax agents to comply with the tax laws. This study examined some selected factors in understanding the tax agents’ tax compliance behaviour by extending the Theory of Planned Behaviour, by including two additional factors namely, ethical sensitivity and culture. Conducted in the tax jurisdictions of Malaysia and New Zealand, this study is comparative in nature. To understand the tax compliance behaviour of tax agents in this study, a mixed-method approach, combining surveys and semi-structured telephone interviews, was used. In Malaysia, the survey data were collected using a mail survey from a sample of tax agents in public practice whose names were listed on the website of the Malaysian Inland Revenue Board. Online surveys were used to collect responses from a sample of members of the New Zealand Institute of Chartered Accountants (NZICA) whose names were listed as public practitioners on NZICA’s website. Descriptive statistics and Partial Least Squares (PLS), a structural equation modeling (SEM) technique, were used to describe and analyze the quantitative data. Transcribing, coding, finding the relevant themes and member checking were used to analyze the qualitative data of the study. Basically, the results indicate some similarities and some differences between tax agents’ compliance behaviour in Malaysia and New Zealand. Consistent with findings from prior studies, the results suggest that attitude towards intention to comply with the tax law was the most influential factor in explaining tax agents’ compliance behaviour to tax law in Malaysia and New Zealand in both scenarios of overstating tax expenses and understating income examined in the study. This was followed by ethical sensitivity, which was measured using Rest’s (1986) Multidimensional Ethics Scale (MES), as the second influential factor in tax agents’ compliance behaviour to tax law. Mixed findings were recorded for culture which was measured using Hofstede’s (1980) National Cultural Dimensions and perceived behavioural control. No support, however, was found for subjective norms in the study. The findings from the survey were elaborated further in the interviews. The interviews with seventeen tax agents in Malaysia and fourteen tax agents from New Zealand provide some interesting findings. While the results of the survey indicate that attitude was found to be the most important factor in tax agents’ tax compliance behaviour, the interview findings clarified how tax agents understand attitude. For instance, attitude was interpreted as not only complying with the professional code of ethics, but also, fear towards being penalized, audited and interestingly, fear towards obtaining a bad reputation among the public and peers. Overall, the findings suggest that noneconomic factors, such as attitudes and ethical sensitivity, can explain the tax compliance behaviour of tax agents in the study. Some economic factors identified for example, amount of risk involved, the trade-off between costs and benefits, and the probability of being penalized, from the interviews could also potentially explain the tax compliance behaviour of the tax agents in Malaysia and New Zealand who participated in the study. The findings contribute to the theoretical and practical aspects of understanding the tax compliance behaviour of tax agents in two different countries. In a response to the calls for more cross-cultural research, this study reveals some similarities and differences in the tax compliance behaviour of tax agents in Malaysia and New Zealand which may be helpful in improving our understanding of the ethical decision making of tax agents. The findings from the study also provide some insights into the ethical behaviour of tax agents in Malaysia and New Zealand which may be useful for professional bodies and regulators.