In many European and Australasian countries, majority of taxpayers do not need to prepare their own income tax returns because their revenue bodies have generated for them. The system is referred to as no-return system. The main idea of such system is mainly to ease taxpayers’ burden and at the same time reducing tax evasion as well as increasing revenue collection. Malaysia has also taken a similar step by introducing Monthly Tax Deduction (MTD) as final tax scheme to salaried group taxpayer. This notion is taken by the Malaysian Government due to cases where some taxpayers who believed that they do not have to file a return form because their incomes have been deducted at source through MTD by their employers, which is absolutely not true. While the scheme is undeniably commendable, it is of researchers’ concern on the factors that affect the taxpayers’ intention to use such scheme. Using the Theory of Reasoned Action (TRA) as a basis theory, this study investigated the influence of attitude and subjective norms towards the usage intention of MTD as final tax. The study used a sample of salaried earners from Petronas and Inland Revenue Board of Malaysia. The results from multiple regression analysis indicate that both factors i.e. attitude and subjective norms have significant relationships towards intention to use MTD as final tax. Furthermore, the results also indicate that attitude is the most influential factor. This study contributes in several ways. Theoretically, it confirms the applicability of TRA in the intention to use MTD as final tax. Practically, the findings on the usage intention towards MTD as final tax and its determinants would also assist the IRBM in formulating strategies or mechanisms for improvement.
Keywords: Monthly tax deduction, personal income tax, theory of reasoned action, attitude, subjective norms
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