Abstract:
The importance of small and medium enterprises (SMEs) as the backbone in contributing to national income in Malaysia is undoubted. However, the Inland Revenue Board of Malaysia (IRBM) had reported statistical evidences pertaining to tax non-compliance among SMEs’ owners. Despite its importance, their tax non-compliance behaviour has not been given enough attention, particularly on their owners. Therefore, this study empirically investigates the influence of guilt-minimisation of SMEs’ owners on their tax non-compliance intention. This study applies Theory of Neutralisation in order to determine the relationship between
the constructs of guilt-minimisation and tax non-compliance intention. Employing survey design, questionnaires were randomly distributed to 580 SME owners in Malaysia, with 72.8 percent response rate. The data collected were analysed by using PLS-SEM statistical tool. Findings reveal that denial of injury, denial of victim, condemn the condemner and appeal to higher loyalties positively influence tax non-compliance intention, whereas denial of responsibility negatively influences tax non-compliance intention. This study is expected to provide meaningful contributions to the government and tax authorities at enhancing the tax
administration and increasing taxpayers’ level of compliance. Suggestions for future
researchers are also highlighted.
