Tax Audit, Deterrence, And In-House Tax Professionals’ Tax Compliance: Empirical Evidence from Malaysia

  • Nivakan Sritharan Universiti Malaysia Sarawak
  • Salawati Sahari Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan, Sarawak, Malaysia
  • Cheuk Choy Sheung Sharon Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan, Sarawak, Malaysia
  • Mohamed Ahmad Syubaili Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan, Sarawak, Malaysia
Keywords: Tax Audit, In-house Tax Professionals, Personal Tax Compliance, Deterrence Theory, SmartPls


The hitherto published studies have not yet explored the tax compliance behaviour of in-house tax professionals. It is assumed from the literature reviews on taxation that a tendency for tax non-compliance exists among the professionals who deal in tax matters in their business establishments when they do not comply with their respective tax systems. Deterrence theory suggests the tax audit or probability of getting audited influences an individual compliance pattern. Given this gap in the literature, this study endeavours to investigate the tax audit impact on Malaysian in-house tax professionals’ tax compliance behaviour. Using purposive and snowball sampling techniques, the data was collected from 392 in-house tax professionals of businesses in Malaysia. SmartPLS is used to analyse the data and test the hypotheses. The findings of this study divulge probability of getting audited strongly impacts upon personal tax compliance of corporate in-house tax professionals. This study opens a gateway to producing extensive and expeditious empirical evidence that could support the relatedness between tax professionals’ personal tax compliance and their decision-making on corporate tax compliance.


Download data is not yet available.


Ahmed, A., & Kedir, S. (2015). Tax compliance and its determinant the case of Jimma Zone, Ethiopia. International Journal of Research in Social Sciences, 6(2), 7-21.

Alkhatib, A. A., Abdul-Jabbar, H., & Marimuthu, M. (2019, February 28). The Effects of Deterrence Factors on Income Tax Evasion among Palestinian SMEs. International Journal of Academic Research in Accounting, Finance and Management Sciences, 8(4).

Bagdad, M. A., Noor, R. M., Hamid, N. A., & Aziz, R. A. (2017). Factors Affecting Tax Gap: Evidence from Tax Audit Cases. Governance and Sustainability of Global Business Economics, 17(1), 149–156.

Berbekova, A., Uysal, M., & Assaf, A. G. (2021, October). A thematic analysis of crisis management in tourism: A theoretical perspective. Tourism Management, 86(1).

Bidin, Z., Sinnasamy, P., & Othman, M. Z. (2015). Excise Duty Compliance and Its Determinants in Malaysia. Global Academic Excellence, 2(1), 40–49.

BIT. (2012). Applying Behavioural Insights to Reduce Fraud, Error and Debt. London: Cabinet Office, UK.

Bobek, D. D., & Radtke, R. R. (2007, September 1). An Experiential Investigation of Tax Professionals’ Ethical Environments. Journal of the American Taxation Association, 29(2), 63–84.

Bornman, M. (2014). Principles for understanding, encouraging, and rewarding voluntary tax compliance (Doctoral dissertation, University of Johannesburg).

Devos, K. (2012). The impact of tax professionals upon the compliance behaviour of Australian individual taxpayers. Revenue Law Journal, 22(1), 31–56.

Dularif, M., T., S., Nurkholis, & Saraswati, E. (2019, April 25). Is deterrence approach effective in combating tax evasion? A meta-analysis. Problems and Perspectives in Management, 17(2), 93–113.

Free Malaysia Today. (2022, June 14). 31,000 possible tax evaders identified, says LHDN. Free Malaysia Today. Retrieved October 5, 2022, from

Hair, Joseph F. (2021, December 9). Reflections on SEM. ACM SIGMIS Database: The DATABASE for Advances in Information Systems, 52(SI), 101–113.

Ho, J. K., Loo, E. C., & Lim, K. P. (2013). Perspective of Non-Taxpayers’ Perceptions on Issues of Ethics and Equity in Tax Compliance. Malaysian Accounting Review, 5(2), 47-59.

Hofstede Insights. (2017, August 22). Malaysia. Retrieved October 6, 2022, from,other%20societal%20rules%20and%20regulations.

International Monetary Fund. (2002, March). Economic Issues No. 30 -- Hiding in the Shadows: The Growth of the Underground Economy. International Monetary Fund.,What%20Is%20the%20Shadow%20Economy%3F,from%20monetary%20or%20barter

Inasius, F. (2018). Factors Influencing SME Tax Compliance: Evidence from Indonesia. International Journal of Public Administration, 42(5), 367–379.

Kasipillai, J., & Shanmugam, B. (1997). Taxation in Malaysia: Assessment, Noncompliance & Investigations. Kedah, Malaysia: UPCAS.

Kelman, H. C. (1958). Compliance, identification, and internalization three processes of attitude change. Harvard University, 2(1).

Kelman H.C. (2006). Interests, relationships, identities: Three central issues for individuals and groups in negotiating their social environment. In: In S.T. Fiske, A.E. Kazdin, & D.L. Schacter (Eds.), Annual Review of Psychology, 57(1), 1-26.

Khreisat, M. N., & Mugableh, A. I. (2020). Multidimensionality of EFL Recreational Reading Attitudes: An EFA and CFA Approach. Journal of Research in Applied Linguistics, 11(2), 57–69.

Kiow, T. S., Salleh, M. F. M., & Kassim, A. A. B. M. (2017). The Determinants of Individual Taxpayers’ Tax Compliance Behaviour in Peninsular Malaysia. International Business and Accounting Research Journal, 1(1), 26.

Kleven, H. J., Knudsen, M. B., Kreiner, C. T., Pedersen, S., & Saez, E. (2011). Unwilling or Unable to Cheat? Evidence From a Tax Audit Experiment in Denmark. Econometrica, 79(3), 651–692.

Kock, N. (2015, October 1). Common Method Bias in PLS-SEM. International Journal of E-Collaboration, 11(4), 1–10.

Latkin, C. A., Edwards, C., Davey-Rothwell, M. A., & Tobin, K. E. (2018, May). The relationship between social desirability bias and self-reports of health, substance use, and social network factors among urban substance users in Baltimore, Maryland. National Library of Medicine, 7(3), 133–136.

Lefebvre, M., Pestieau, P., Riedl, A., & Villeval, M. C. (2015). Tax evasion and social information: an experiment in Belgium, France, and the Netherlands. International Tax and Public Finance, 22(3), 401–425.

Lutfi, A. A., Idris, K. M., & Mohamad, R. (2017). AIS usage factors and impact among Jordanian SMEs: The moderating effect of environmental uncertainty. Journal of Advanced Research in Business and Management Studies, 6(1), 24-38.

Malaysian Bar. (2022). Update | Legal Professional Privilege: Director General of Inland Revenue v Malaysian Bar. Malaysian Bar. Retrieved October 6, 2022, from

Ministry of Finance Malaysia. (2019a). Budget 2019. The Budget Speech Text. Retrieved from

Ministry of Finance Malaysia. (2019b). Budget 2020. Government of Malaysia.

Mulligan, E., & Oats, L. (2016, July). Tax professionals at work in Silicon Valley. Accounting, Organizations and Society, 52, 63–76.

New Straights Times. (2018). Are Malaysians collectivistic in nature?. New Straights Times. Retrieved October 6, 2022, from

Noordin, F., & Jusoff, K. (2010, February 23). Individualism‐collectivism and job satisfaction between Malaysia and Australia. International Journal of Educational Management, 24(2), 159–174.

Obaid, M. M. A., Ibrahim, I., & Udin, N. M. (2020). An Investigation of the Determinants of Tax Compliance Among Yemeni Manufacturing SMEs Using the Fisher Model. International Journal of Psychosocial Rehabilitation, 24(04), 1809–1824.

Richardson, M., & Sawyer, A. (2001). A taxonomy of the tax compliance literature: Further findings, problems and prospects. Australian Tax Forum, 16(2), 137-320.

Salawati, S., Sritharan, N., Sheung, S. C. C., & Mohamed, A. S. (2021). Does Tax Knowledge Motivate Tax Compliance in Malaysia? Research in World Economy, 12(1), 238–251.

Sarstedt, M., Ringle, C. M., & Hair, J. F. (2021, December 3). Partial Least Squares Structural Equation Modeling. Handbook of Market Research, 587–632.

Saunders, M., Lewis, P., & Thornhill, A. (2003). Research Methods for Business Students (Fifth Edition) [E-book]. Pearson Education.

Sekaran, U. (2005). Cram 101 textbook outlines to accompany, 4th ed., Moorpark, CA: Academic Internet Publ., pp.293-294.

Sinnasamy, P., Bidin, Z., & Ismail, S. S. S. (2015, November). A Proposed Model of Non-compliance Behaviour on Excise Duty: A Moderating Effects of Tax Agents. Procedia - Social and Behavioral Sciences, 211, 299–305.

Sritharan, N., & Salawati, S. (2019). Examining the Moderating Effect of Tax Knowledge on the Relationship between Individual Factors and Income Tax Compliance Behaviour in Malaysia. International Journal of Academic Research in Accounting, Finance and Management Sciences, 9(3), 160–172.

Sritharan, N., Salawati, S., & Choy-Sheung Cheuk, S. (2020). How Social Factor Determine Individual Taxpayers’ Tax Compliance Behaviour in Malaysia? International Journal of Business and Society, 21(3), 1444–1463.

Sritharan, N., & Salawat, S. (2019). Economic Factors Impact on Individual Taxpayers’ Tax Compliance Behaviour in Malaysia. International Journal of Academic Research in Accounting, Finance and Management Sciences, 9(2), 172–182.

Sritharan, N., Sahari, S., & Sharon, C. C. S. (2022a). A Systematic Literature Review on Tax Evasion: Insights and Future Research Agenda. International Journal of Academic Research in Accounting Finance and Management Sciences, 12(2), 84-105.

Sritharan, N., Salawati, S., Sharon, C. C. S., & Syubaili, M. A. (2022b). Corporate Tax Avoidance: A Systematic Literature Review and Research Agenda. International Journal of Academic Research in Business and Social Sciences, 12(8), 1160–1180.

Sumari, M., Baharudin, D. F., Khalid, N. M., Ibrahim, N. H., & Ahmed Tharbe, I. H. (2019, April 22). Family Functioning in a Collectivist Culture of Malaysia: A Qualitative Study. The Family Journal, 28(4), 396–402.

Walsh, K. (2012). Understanding Taxpayer Behaviour – New Opportunities for Tax Administration. The Economic and Social Review, 43(3), 7-12.

World Bank. (2018). Malaysia: Tax revenue. World Tax Database. Retrieved from

World Bank. (2020a). Gross National Income, Malaysia. Current International Income Database. Retrieved from ?locations=MY

World Bank. (2020b). Tax revenue (% of GDP) - Malaysia | Data.

How to Cite
Sritharan, N., Salawati Sahari, Cheuk Choy Sheung Sharon, & Mohamed Ahmad Syubaili. (2023). Tax Audit, Deterrence, And In-House Tax Professionals’ Tax Compliance: Empirical Evidence from Malaysia. The Journal of Management Theory and Practice (JMTP), 3(3), 20-27.
Finance & Economics