Drivers of tax planning among Small and Medium Enterprises (SMEs) in the manufacturing sector

Tax planning is a critical aspect of financial management for small businesses in Kedah, Malaysia. However, many SMEs struggle with it due to the tax system's complexity, frequent changes to tax regulations and laws, and the lack of tax understanding among small business owners. Acknowledging this predicament, this study examines drivers of tax planning among small and medium enterprises (SMEs) in the manufacturing sector using the Resource-Based View (RBV) theory. An online survey method was employed to collect data, yielding 158 responses. The findings reveal that tax fairness, tax penalties, and tax incentives are significant drivers of tax planning among manufacturing SMEs. On the other hand, tax knowledge was not significantly related to tax planning. This study enhances the understanding of tax planning among manufacturing SMEs. It highlights the need to create a fair tax environment, effective tax penalty systems, and provide tax incentives to encourage tax planning in this sector.