FACTORS IMPACTING SERVICE TAX COMPLIANCE: A CONCEPTUAL REVIEW UNDER THE SST REGIME IN MALAYSIA
DOI:
https://doi.org/10.35631/AIJBES.828035Keywords:
Sales and Service Tax, Service Tax Compliance, Tax Knowledge, Theory of Planned Behaviour, Trust in Tax AuthoritiesAbstract
Service tax compliance has become a critical concern in Malaysia's evolving Sales and Service Tax (SST) regime, particularly following recent legislative revisions that increased tax rates and expanded taxable categories. Despite continuing enforcement efforts by the Royal Malaysian Customs Department (RMCD), challenges such as underreporting and inaccurate declarations persist among business registrants. While existing literature extensively covers income tax, Goods and Services Tax (GST), and Value-Added Tax (VAT), service tax compliance in Malaysia's current system is limited attention has been given. To address this gap, this study synthesises behavioural taxation literature to develop a conceptual framework based on the Theory of Planned Behaviour (TPB). The proposed model examines how perceived tax system effectiveness, law enforcement, tax complexity, tax knowledge, and trust in tax authorities influence service tax compliance behaviour. Importantly, this study indicates that compliance is driven not only by deterrent mechanisms, but also by institutional and behavioural factors that influence voluntary compliance. Moreover, in this complex situation, trust in tax authorities is introduced as a key moderator that may strengthen or weaken compliance behaviour. Finally, this paper contributes to the indirect tax literature by extending the TPB to the indirect tax setting and provides the groundwork for future empirical research and targeted policy development.
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