Tax malfeasance of high net-worth individuals in Malaysia: tax audited cases
| Date | 02 January 2018 |
| Pages | 155-169 |
| DOI | https://doi.org/10.1108/JFC-11-2016-0070 |
| Published date | 02 January 2018 |
| Author | Rasyidah Che Rosli,Lai Ming Ling,Roslani Embi |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial crime |
Tax malfeasance of high
net-worth individuals in Malaysia:
tax audited cases
Rasyidah Che Rosli
Faculty of Accountancy, Universiti Teknologi MARA, Shah Alam, Malaysia
Lai Ming Ling
Faculty of Accountancy and Accounting Research Institute, Universiti Teknologi
MARA, Shah Alam, Malaysia, and
Roslani Embi
Faculty of Accountancy, Universiti Teknologi MARA, Shah Alam, Malaysia
Abstract
Purpose –This paper aims to analysethe profiles of high net-worth individuals (HNWIs) who were caught
for tax malfeasance duringa tax audit and to examine factors that influence tax malfeasance among HNWIs
in Malaysia.
Design/methodology/approach –This paper examined 235 HNWIs who were involved in tax
malfeasance after audited by the InlandRevenue Board Malaysia from year 2009 to 2013. A research model
was developed to examine the influence of four independent variables which are tax rate, level of income,
source ofincome and taxation performed by tax professionalson tax malfeasance.
Findings –Multiple regression was used to test the proposed research model. The findings show that
source of income and taxation performed by tax professionals influence tax malfeasance among HNWIs in
Malaysia. This study also uncoversno significant relationshipbetween tax rate and level of income with tax
malfeasanceof HNWIs.
Originality/value –This study could be the first in Malaysia that has used actual audited data in
examining taxmalfeasance among HNWIs. This study providesimportant insights not only to the Malaysian
tax authorities but also to tax authoritiesand tax researchers in other parts of the world, given the fact that
tax malfeasanceof HNWIs is a prevalent and universal problem.
Keywords Tax audited cases, High net-worth individuals, Tax malfeasance
Paper type Research paper
1. Introduction
The tax malfeasance issue among high net-worth individuals (HNWIs) is a major concern
for tax authorities and governments around the world. According to Organisation for
Economic Co-operationand Development (OECD) (2009), HNWIs pose significant challenges
to their tax administration because of the complexity of their tax affairs, their revenue
contribution, their opportunity for aggressive tax planning and the impact of compliance
behaviour on the integrity of thetax system. With the existence of tax havens and offshore
financial centres, tax malfeasance among HNWIs surged significantly. The tax scandals
exposed by Luxembourg and the Panama Papers cases has caused great concerns for the
tax authorities. The prevalenceof tax malfeasance among HNWIs has significantlyaffected
tax revenue collection, economic and social developments and widen the tax gap between
High net-worth
individuals in
Malaysia
155
Journalof Financial Crime
Vol.25 No. 1, 2018
pp. 155-169
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-11-2016-0070
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