Tax non-compliance: Evidence from finalized corporate tax audited cases in 2010

This study examines the key factors of corporate tax non-compliance in Malaysia. A random sampling method was used to collect 232 finalized audited corporate tax cases in 2010 by the Inland Revenue Board Malaysia's headquarter. Of these, 12 cases with zero sales revenue and 26 cases with zero tax adjustment were discarded. The final samples consisted of 194 cases with tax audit adjustment amounted to RM 114.35 million. Multiple regression results revealed that financial liquidity; foreign ownership and company size were found to be significant determinants of tax non-compliance. The results also show that manufacturing companies commit less tax non-compliance as compared to other industries. Notably, penalty rate and financial performance have no significant association with tax non-compliance. This study has merit as it analyzed the actual finalized audited corporate tax data retrieved from the archive of the Inland Revenue Board Malaysia, which are not available publicly. The findings provide some insights to the tax authorities in tax audits selection, prevention and detection of corporate tax non-compliance.