Tax Practitioners and the Electronic Filing System: An Empirical Analysis

Abstract

ABSTRACT Globally, the tax environment is changing rapidly. The advancement of information and communication technology (ICT) is challenging the operation of the tax revenue system. Tax authorities are being challenged to maintain a modernized and responsive tax administration system. Since the 1990s, several tax authorities; particularly those from the developed countries and Asia-pacific regions have progressively harnessed the power of ICT by embracing an electronic tax filing (e-filing) system. Most recently, the Malaysian Inland Revenue Board has been streamlining the tax administrative policies to embrace an e-filing system. This paper examines the usage intentions, attitudes, perceptions and compliance considerations of Malaysian tax practitioners towards the e-filing system. Mail survey was administered on 600 tax practitioners throughout Malaysia. The results report that the respondents have strong usage intentions; nonetheless, they are wary of the security of the e-filing system. The quest for 'speedy tax refunds' ranked as the most important incentive for the respondents to embrace the e-filing system. At the same time, lack of confidence in the electronic administrative capabilities of the tax authority appears to discourage take-up of the e-filing system. Overall, empirical evidence provides useful insights for the tax authority to build better accepted system. INTRODUCTION An e-filing system encompasses the use of the Internet technology, the worldwide web and tax preparation software for a wide range of tax administration and compliance purposes (FTA, 2001). The chief advantage of an e-filing system is that it integrates tax preparation, tax filing and tax payment. With the e-filing system, taxpayers and tax practitioners can file income tax returns electronically via the enabling technologies, rather than through mail or physically visiting the tax office. This may eventually make the art of tax filing and tax payment as easy as possible. Prior studies found that tax practitioners are important third party in tax compliance setting, as a great number of taxpayers deal with tax authorities through tax practitioners (Erard, 1993; Newsberry, Reckers & Wyndelts, 1993). Erard (1993) asserted that tax practitioners are in a capacity to exercise strong and direct influence on the tax compliance and administration process. Notably, the tax authorities in the US, UK and Australia are counting on tax practitioners to promote the e-filing system (Kahan, 1999; NAO, 2002). Thus, in a similar vein, the IRB is also counting on Malaysian tax practitioners to promote the e-filing system. As such, there is a practical need for the e-filing system to be acceptable to the tax practitioners. However, to date, there have been little published empirical studies on the reactions of tax practitioners towards e-filing system worldwide. (1) Therefore, in considering that e-filing is the direction global tax authorities is taking, this study has emerged to find out how tax practitioners in developing nation response to e-filing endeavor to address a research void, in order to fill up a knowledge gap. This study aimed (i) to assess the usage intentions, attitudes and perceptions of Malaysian tax practitioners towards the e-filing system, (ii) to examine the importance of various incentives that will motivate take-up (iii) to explore tax practitioners' compliance considerations and reactions towards the implementation of the e-filing system. LITERATURE REVIEW The theory of reasoned action (TRA) states that an individual's beliefs influence attitude, which in turn affects intention, and subsequently guides actual behavior (Fishbein & Ajzen, 1975). Theoretically, it is assumed that users generally intend to act before they act. Adapting from the TRA, Davis (1989) hypothesized that user acceptance of an information system/information technology (IS/IT) can be measured from his/her usage intention of a particular IS/IT. …

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