The Influence of Company Reputation, Service Quality and Directors’ Tax Knowledge on Tax Compliance Behaviour of Malaysian Large Companies

Tax compliance behaviour among Malaysian large companies is a crucial area of investigation, particularly considering the significant contribution of corporate taxes to national revenue. Researchers have suggested that tax compliance behaviour of large companies in Malaysia is likely influenced by their surrounding compliance practices. However, to date, no published studies have explored the relationship between company reputation, service quality, and directors’ tax knowledge, and corporate tax compliance behavior, which has led to this research. For the purpose of this study, the Behavioural Decision Theory (BDT) was employed to explain optimality in decision-making, judgment, and human choice, in tax compliance behaviour. An online questionnaire was distributed to 500 Malaysian large companies in Peninsular Malaysia through the systematic random sampling method, of which 161 companies (32.2%) responded. The data was analysed using Partial Least Squares-Structural Equation Modelling (PLS-SEM). The results reveal a significantly positive relationship between directors’ tax knowledge and large companies’ tax compliance behaviour. On the other hand, negative relationships are documented for company reputation and service quality, and tax compliance behaviour. The results, however, are not significant. This study recommends that the tax knowledge of company directors is important to ensure companies comply with the tax law voluntarily. Hence, training programmes for directors should be conducted regularly so as to assure their knowledge is current, ultimately promoting ethical decision-making, i.e., minimising tax evasion and misreporting.