IDEAS home Printed from https://ideas.repec.org/a/ukm/jlekon/v47y2013i1p99-108.html
   My bibliography  Save this article

Causes of Tax Evasion and Their Relative Contribution in Malaysia: An Artificial Neural Network Method Analysis

Author

Listed:
  • Tabandeh, Razieh

    (School of Economics Faculty of Economics and Management, UniversitiKebangsaan Malaysia 43600 UKM Bangi Selangor MALAYSIA)

  • jusoh, mansor

    (School of Economics Faculty of Economics and Management, UniversitiKebangsaan Malaysia 43600 UKM Bangi Selangor MALAYSIA)

  • Md Noor, Nor Ghani

    (School of Economics Faculty of Economics and Management, UniversitiKebangsaan Malaysia 43600 UKM Bangi Selangor MALAYSIA)

  • Zaidi, Mohd Azlan Shah

    (School of Economics Faculty of Economics and Management, UniversitiKebangsaan Malaysia 43600 UKM Bangi Selangor MALAYSIA)

Abstract

Tax is one means of financing government expenditures and plays an important role in increasing government revenue. The amount of tax collected actually depends on the effectiveness of the tax system in an economy. When a taxation system is ineffective, many people will exploit the situation to avoid paying tax and tax evasion will become popular. In the presence of tax evasion, the government cannot allocate revenue for programs or provide desirable social services. Realizing the significant impact of tax evasion on the economy, the present study aims to determine the main factors that result in tax evasion and their relative importance. The present study employs an artificial neural network (ANN) methodology on Malaysian data for the period between 1963 and 2011. The results show that tax burden, size of the government and inflation rate have positive effects on tax evasion. The income of taxpayers and trade openness, however, has negative effects on tax evasion. The results also reveal that the income of the taxpayer has a more significant relationship with levels of tax evasion than the other causes of tax evasion examined in the present study.

Suggested Citation

  • Tabandeh, Razieh & jusoh, mansor & Md Noor, Nor Ghani & Zaidi, Mohd Azlan Shah, 2013. "Causes of Tax Evasion and Their Relative Contribution in Malaysia: An Artificial Neural Network Method Analysis," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 47(1), pages 99-108.
    • Handle: RePEc:ukm:jlekon:v:47:y:2013:i:1:p:99-108
    as

    Download full text from publisher

    File URL: http://www.ukm.my/jem/wp-content/uploads/2021/06/jeko_471-10.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fishlow, Albert & Friedman, Jorge, 1994. "Tax evasion, inflation and stabilization," Journal of Development Economics, Elsevier, vol. 43(1), pages 105-123, February.
    2. Hill, Tim & Marquez, Leorey & O'Connor, Marcus & Remus, William, 1994. "Artificial neural network models for forecasting and decision making," International Journal of Forecasting, Elsevier, vol. 10(1), pages 5-15, June.
    3. Crane, Steven E & Nourzad, Farrokh, 1986. "Inflation and Tax Evasion: An Empirical Analysis," The Review of Economics and Statistics, MIT Press, vol. 68(2), pages 217-223, May.
    4. Fishburn, Geoffrey, 1981. "Tax Evasion and Inflation," Australian Economic Papers, Wiley Blackwell, vol. 20(37), pages 325-332, December.
    5. Caballe, Jordi & Panades, Judith, 2004. "Inflation, tax evasion, and the distribution of consumption," Journal of Macroeconomics, Elsevier, vol. 26(4), pages 567-595, December.
    6. Richardson, Grant, 2008. "The relationship between culture and tax evasion across countries: Additional evidence and extensions," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 17(2), pages 67-78.
    7. Kim, Sangheon, 2008. "Does political intention affect tax evasion?," Journal of Policy Modeling, Elsevier, vol. 30(3), pages 401-415.
    8. Nowrouz Kohzadi & Milton S. Boyd & Iebeling Kaastra & Bahman S. Kermanshahi & David Scuse, 1995. "Neural Networks for Forecasting: An Introduction," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 43(3), pages 463-474, November.
    9. Schneider, Friedrich, 1994. "Can the Shadow Economy Be Reduced through Major Tax Reforms? An Empirical Investigation for Austria," Public Finance = Finances publiques, , vol. 49(Supplemen), pages 137-152.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Caballe, Jordi & Panades, Judith, 2004. "Inflation, tax evasion, and the distribution of consumption," Journal of Macroeconomics, Elsevier, vol. 26(4), pages 567-595, December.
    2. Basil Dalamagas, 2011. "A Dynamic Approach to Tax Evasion," Public Finance Review, , vol. 39(2), pages 309-326, March.
    3. Hannelore Weck-Hannemann & Werner W. Pommerehne, 1989. "Einkommensteuerhinterziehung in der Schweiz: Eine empirische Analyse," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 125(IV), pages 515-556, December.
    4. Kurauone, Ophias & Kong, Yusheng & Sun, Huaping & Muzamhindo, Simbarashe & Famba, Takuriramunashe & Taghizadeh-Hesary, Farhad, 2021. "The effects of International Financial Reporting Standards, auditing and legal enforcement on tax evasion: Evidence from 37 African countries," Global Finance Journal, Elsevier, vol. 49(C).
    5. T. P. Sinha, 2022. "A Macro-Econometric VAR Model of India Incorporating Black Income," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 20(3), pages 629-660, September.
    6. Nora Angour & Mohammed Nmili, 2019. "Estimating Shadow Economy and Tax Evasion: Evidence from Morocco," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(5), pages 1-7, May.
    7. Yi-Chung Hsu & Chien-Chiang Lee, 2016. "Factors Affecting Tax Evasion: Do Interest Rate And Regional Effects Matter?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(04), pages 1-23, September.
    8. Pommerehne, Werner W. & Frey, Bruno S., 1992. "The effects of tax administration on tax morale," Discussion Papers, Series II 191, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    9. James Alm & Abel Embaye, 2013. "Using Dynamic Panel Methods to Estimate Shadow Economies Around the World, 1984-2006," Working Papers 1303, Tulane University, Department of Economics.
    10. Mohammad Nurunnabi, 2018. "Tax evasion and religiosity in the Muslim world: the significance of Shariah regulation," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(1), pages 371-394, January.
    11. Mohammad Abd Alaffo AlAdham & Mohammed Abdallah Abukhadijeh & Mohammad Fayez Qasem, 2016. "Tax Evasion and Tax Awareness Evidence from Jordan," International Business Research, Canadian Center of Science and Education, vol. 9(12), pages 65-75, December.
    12. Lumir Abdixhiku, Geoff Pugh, Iraj Hashi, 2018. "Business Tax Evasion in Transition Economies: A Cross-Country Panel Investigation," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 15(1), pages 11-36, June.
    13. Embaye, Abel, 2007. "Underground economy estimates for non-OECD countries using currency demand method, 1984-2005," MPRA Paper 20308, University Library of Munich, Germany.
    14. James, Simon & Edwards, Alison, 2010. "An annotated bibliography of tax compliance and tax compliance costs," MPRA Paper 26106, University Library of Munich, Germany.
    15. Combey, Adama, 2020. "Evaluation De L’Ecart De Tva Au Togo [Evaluation Of The Vat Gap In Togo]," MPRA Paper 101478, University Library of Munich, Germany.
    16. Chatfield, Chris, 1995. "Positive or negative?," International Journal of Forecasting, Elsevier, vol. 11(4), pages 501-502, December.
    17. Friedrich Schneider & Robert Klinglmair, 2004. "Shadow economies around the world: what do we know?," Economics working papers 2004-03, Department of Economics, Johannes Kepler University Linz, Austria.
    18. Khalil, Sandra & Sidani, Yusuf, 2020. "The influence of religiosity on tax evasion attitudes in Lebanon," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 40(C).
    19. Schneider Friedrich & Buehn Andreas, 2017. "Shadow Economy: Estimation Methods, Problems, Results and Open questions," Open Economics, De Gruyter, vol. 1(1), pages 1-29, March.
    20. Andreas Bühn & Friedrich Schneider, 2008. "MIMIC Models, Cointegration and Error Correction: An Application to the French Shadow Economy," CESifo Working Paper Series 2200, CESifo.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ukm:jlekon:v:47:y:2013:i:1:p:99-108. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Muhammad Asri Abd Ghani (email available below). General contact details of provider: https://edirc.repec.org/data/feukmmy.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.