An investigation of the attitudes of business taxpayers towards the Malaysian Goods and Services Tax and its potential managerial benefits

The Malaysian Goods and Services Tax (‘GST’) was implemented in April 2015 to replace the Sales and Services Tax (‘SST’), as part of the Malaysian tax reform, which was aimed at reducing the country’s budget deficit by improving its revenue collection system. This study is part of a major project that investigated the start-up compliance costs of GST for Malaysian business taxpayers. Sixty-eight questionnaires were received from businesses that were registered for GST. This research applied the Theory of Planned Behaviour model to investigate business taxpayers’ attitudes towards the Malaysian GST and its potential managerial benefits. A five-point Likert attitude scale was employed to measure the attitudes of businesses towards the introduction of the GST in Malaysia. Prior studies report that Malaysian business enterprises incurred high mean gross GST start-up compliance costs. The findings of this investigation confirm that there is a direct relationship between business attitudes towards GST compliance and start-up compliance costs. Overall, respondents strongly disagreed with the statement ‘I do not mind doing GST work’. Further, those who indicated that GST is unreasonably complicated, reported higher average GST start-up compliance costs. Counter-intuitively, businesses that supported the government’s tax reform also incurred higher average GST start-up compliance costs. This study found that some businesses derived managerial benefits from complying with the GST. The managerial benefits include improved accounting information systems, improved controls to prevent theft and fraud, as well as savings in accounting costs by using internal staff to maintain records. Surprisingly, businesses that expected to derive managerial benefits incurred higher costs than those who did not expect to receive such benefits. This paper concludes with some policy implications for Malaysia and possibly for other countries yet to introduce a GST.