Page 1 of 12
Advances in Social Sciences Research Journal – Vol. 11, No. 9.2
Publication Date: September 25, 2024
DOI:10.14738/assrj.119.2.17396.
Kamarudin, S. N., Mohamad, A., Nasir, N. E. M., & Abdul Malak, S. S. D. (2024). E-Tax Services and their Evolution: The Case of
Malaysia. Advances in Social Sciences Research Journal, 11(9.2). 79-90.
Services for Science and Education – United Kingdom
E-Tax Services and their Evolution: The Case of Malaysia
Siti Nurhazwani Kamarudin
Faculty of Accountancy, Universiti Teknologi MARA Terengganu,
Dungun Campus, Malaysia
Azlinda Mohamad
Faculty of Accountancy, Universiti Teknologi MARA Terengganu,
Dungun Campus, Malaysia
Noor Emilina Mohd Nasir
Faculty of Accountancy, Universiti Teknologi MARA Terengganu,
Dungun Campus, Malaysia
Siti Seri Delima Abdul Malak
Tunku Puteri Intan Safinaz School of Accountancy (TISSA-UUM),
Universiti Utara Malaysia
ABSTRACT
The rapid development of information and communication technology has
revolutionised many areas globally, including taxation. Worldwide, the electronic
tax system (e-tax) has become a necessity. Countries aim to improve efficiency of
tax administration and ease for taxpayers, by incorporating technology and going
digital, in their tax systems. E-tax has notable benefits, such as simplifying tax
return procedures, reducing processing time and potentially improving tax
compliance. In Malaysia, the tax system has also evolved over the years,
incorporating digitalization. This is from the introduction of e-filing in 2006 and to
the current rollout of e-invoicing. This evolution has enhanced tax filing among
Malaysian corporate and individual taxpayers with 100 percent and 98.2 percent
compliance respectively, standing among the top countries in Southeast Asia for
compliance level in 2018-2019. However, several obstacles need to be overcome for
the effective implementation of e-tax systems. Key issues such as lack of
infrastructure, system integration, lack of digital literacy, taxpayer resistance and
data security concerns are highlighted in this study. This paper then provides
recommendations for policymakers and tax authorities to overcome these
challenges to ensure a successful implementation of e-tax in Malaysia. The
strategies include investment in infrastructure and technology, public education as
well as strengthening collaboration with stakeholders.
Keywords: E-tax, Tax Administration, Digital, Technology, Malaysia
INTRODUCTION
The rapid advancement in information technology and the emergence of Society 5.0 have led to
many countries across the globe embracing e-government services including e-tax. Service is
defined by [1] as a way of serving which helps to prepare necessary needs and convenience for
Page 2 of 12
80
Advances in Social Sciences Research Journal (ASSRJ) Vol. 11, Issue 9.2, September-2024
Services for Science and Education – United Kingdom
the taxpayers. The Organisation for Economic Co-operation and Development (OECD) states
that tax administration should be ‘fair, efficient and effective’ in ensuring the balance between
generating government revenue through tax collection and fairness in burdens to the taxpayers
[2]. [3] noted that the evaluation of tax revenue collection was associated with the achievement
of tax administration goals, particularly in increasing taxpayers’ compliance and uniform
implementation of tax laws. This is supported by [1] who showed that the ease of a tax system
would improve tax compliance.
The 2023 OECD Tax Administration Report on ‘Comparative Information on OECD and other
Advanced and Emerging Economies,’ showed that in 2021, 63.8% of countries are using virtual
assistants, 54.4% of countries are using artificial intelligence and 93% are using application
programming interfaces [4]. The countries include 58 jurisdictions around the world including
Malaysia. The delivery of services and overall support to the tax ecosystem are now inherently
reliant on technology and digital tools. The reliance on technology is consistent with the
primary missions of tax administrations worldwide, which are to ensure ahigh level of
voluntary compliance, a high level of trust in tax administration and a higher level of
productivity among tax officers [5].
At the heart of these, are technology-enabled self-assessment systems (SAS), online payment
and online monthly tax deductions [6]. SAS has been successfully implemented since the 1980s
in countries like Pakistan, Sri Lanka, Indonesia, and the United Kingdom [7, 8]. Despite a later
start, Malaysia's introduction of SAS in 2001 has significantly increased its tax revenue
collection. Similarly, Slovenia introduced a personal income tax online service after the launch
of an e-tax portal in 2003, although it took some time for Slovenian taxpayers to use the online
services, with only 2.8 % of personal income tax being filed electronically in 2006 (see Table
1). Table 1 showcases the percentage of online personal income tax submissions in selected
countries in their initial years of implementation. Several European countries have achieved
high levels of personal e-tax submissions; for instance, Estonia (59 %) and Ireland (53 %) in
2004.
Table 1: Percentage of online personal income tax submission in selected countries.
Country/Year 2002 2003 2004 2005 2006
Estonia 21 36 59 82 -
France 0.6 7 20 - -
Ireland 9 34 53 - -
Slovenia - - 1.5 2 2.8
Spain - 8 15 - -
Sweden - - 13 28 52
Portugal - - 24 40 -
The data is further supported by OECD which showed that the average e-filing rates from its
participating jurisdictions have significantly improved for 2018 to 2021. The average e-filing
users are above 85% for personal taxpayers and 95% for business taxpayers as shown in Table
2. As for Malaysia, the evolution in its tax system has enhanced compliance level significantly
with 100 % compliance for corporate taxpayers and 98.2 % for individual taxpayers in 2019.
This achievement has placed Malaysia among the top countries in Southeast Asia in terms of