Compliance Risk of Sales and Services Tax 2.0 in Malaysian Environment: Perspectives of Tax Administrators

Abstract

The objective of this study is to explore the internal and external compliance risks in the context of Sales and Services Tax 2.0 implemented in Malaysia. The foundation for this study is derived from Committee of Sponsoring Organization’s (COSO) Enterprise Risk Management (ERM) Integrated Framework, highlighting various forms of risks of organizations. Data was gathered through interviews with tax officers handling SST 2.0, and subsequently transcribed and analysed using thematic analysis. Findings indicate that organizational work culture, human resources, professionalism, and information technology makes up the internal risks while legislation, public opinion, and political influence forms the external risks. The findings provide meaningful insight for the tax authority in developing their risk management strategies in their effort to improve SST 2.0 compliance, and enhance their resilience to potential threats and challenges. Identification of risk management strategies based on the underlying risks would assist the tax authority to mitigate or eliminate negative risks while taking advantage of positive risks, and consequently improving tax compliance.