The Mediating Effect of Tax Fairness on the Relationship Between Knowledge, Complexity and Voluntary Tax Compliance

  • Anna Azriati Che Azmi Faculty of Business and Accountancy, University of Malaya
  • Suria Zainuddin Faculty of Business and Accountancy, University of Malaya
  • Mohd Zulkhairi Mustapha Faculty of Business and Accountancy, University of Malaya
  • Yusni Nawi Inland Revenue Board of Malaysia


This study aims to examine the mediating role of tax fairness on the relationship between tax knowledge, tax complexity, and voluntary tax compliance. Based on 200 samples of taxpayers, it is found that tax knowledge increases tax fairness perceptions, which, consequently, increases tax compliance behaviour. Similarly, tax fairness perceptions do not reduce the tax compliance directly, but indirectly through the role of tax fairness perceptions. This implies that tax authorities should not only focus on introducing or developing tax rules that are fair to the taxpayers but be able to communicate the rationale of a tax rule in the context of how it permeates fairness into the tax system for certain classes of taxpayers. Our study found that, in situations where tax simplification is not possible, this form of information dissemination could lead to better compliance among taxpayers.

Keywords: Tax Compliance, Knowledge, Fairness, Complexity
JEL Classification: H260


Alm. (1991). A Perspective on the Experimental Analysis of Taxpayer Reporting. The Accounting Review, 66(3), 577-593.
Azmi, & Perumal. (2008). Tax fairness dimensions in an Asian context: The Malaysian perspective. International Review of Business Research Papers, 4(5), 11-19.
Bartol. (1983). Turnover among DP personnel: a casual analysis. Communications of the ACM, 26(10), 807-811.
Bobek, & Hatfield. (2001). The effect of policy objectives, complexity, and self-interest on individuals' comparative fairness judgments of a flat tax Advances in Taxation (pp. 1-25): Emerald Group Publishing Limited.
Cook, & Hegtvedt. (1983). Distributive justice, equity, and equality. Annual review of sociology, 217-241.
Eriksen, & Fallan. (1996). Tax knowledge and attitudes towards taxation; A report on a quasi-experiment. Journal of economic psychology, 17(3), 387-402.
Evans. (2012). Tax Governance Issues: Managing System Complexity. Economic Papers: A journal of applied economics and policy, 31(1), 30-35.
Fallan. (1999). Gender, exposure to tax knowledge, and attitudes towards taxation; an experimental approach. Journal of Business Ethics, 18(2), 173-184.
Fornell, & Larcker. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of marketing research, 39-50.
Gilligan, & Richardson. (2005). Perceptions of tax fairness and tax compliance in Australia and Hong Kong-a preliminary study. Journal of financial crime, 12(4), 331-343.
Hanefah. (1996). An Evaluation of the Malaysian Tax Administrative System and Taxpayers Perceptions Towards Assessment Systems, Tax Law Fairness and Tax Law Complexity. Universiti Utara Malaysia.
Hasseldine, & Hite. (2003). Framing, gender and tax compliance. Journal of economic psychology, 24(4), 517-533.
Hulland, & Business. (1999). Use of partial least squares (PLS) in strategic management research: A review of four recent studies. Strategic management journal, 20(2), 195-204.
Islam, Yusuf, & Bhuiyan. (2015). Taxpayers’ Satisfaction in Using E—Fih ‘ng System in Malaysia: Demographic Perspective. The Social Sciences, 10(2), 160-165.
Kasipillai, & Abdul-Jabbar. (2006). Gender and ethnicity differences in tax compliance. Asian Academy of Management Journal, 11(2), 73-88.
Kasipillai, Aripin, & Afza. (2003). The Influence of Education on Tax Avoidance and Tax Evasion. eJournal of Tax Research, 1(2), 134 -146.
Katz, & Ott. (2011). If we could choose the way we pay: The impact of decision complexity on tax scheme preference. Journal of Applied Business Research (JABR), 22(3).
Kirchler. (2007). The economic psychology of tax behaviour: Cambridge University Press.
Loo, Mckerchar, & Hansford. (2009a). Understanding the compliance behaviour of Malaysian individual taxpayers using a mixed method approach. Journal of the Australasian Tax Teachers Association, 4(1), 181-202.
Loo, Mckerchar, & Hansford. (2009b). Understanding The Compliance Behaviour Of Malaysian Individual Taxpayers Using A Mixed Method Approach. Journal of the Australasian Tax Teachers Association, 4(1).
McKerchar. (2002). The Effects of Complexity on Unintentional Noncompliance for Personal Taxpayers in Australia. Austl. Tax F., 17, 3.
McKerchar. (2007). Tax complexity and its impact on tax compliance and tax administration in Australia. Paper presented at the 2007 IRS Research Conference.
Mohd Hanefah. (1996). An evaluation of the malaysian tax administrative system, and taxpayers’ perceptions towards assessment systems, tax law fairness, and tax law complexity. (Doctor of Philosophy), Universiti Utara Malaysia, Kedah, Malaysia.
Nunnally. (1978). C.(1978). Psychometric theory: New York: McGraw-Hill.
Palil. (2005). Taxpayers knowledge: A descriptive evidence on demographic factors in Malaysia. Jurnal Akuntansi dan Keuangan, 7(1), pp. 11-21.
Palil. (2010). Tax knowledge and tax compliance determinants in self assessment system in Malaysia. University of Birmingham.
Pedhazur. (1982). Multiple regression in behavioral research: Explanation and prediction. New York: Holt, Rinehart and Winston.
Porcano. (1984). Distributive justice and tax policy. Accounting Review, 619-636.
Saad. (2010). Fairness Perceptions and Compliance Behaviour: The Case of Salaried Taxpayers in Malaysia after Implementation of the Self-Assessment System. eJournal of Tax Research, 8(1), 32.
Saad. (2014). Tax knowledge, tax complexity and tax compliance: Taxpayers’ view. Procedia-Social and Behavioral Sciences, 109, 1069-1075.
Sapiei, Kasipilai, & Eze. (2014). Determinants of tax compliance behaviour of corporate taxpayers in Malaysia. eJournal of Tax Research, 12(2), 383.
Schisler. (1995). Equity, aggressiveness, consensus: A comparison of taxpayers and tax preparers. Accounting Horizons, 9(4), 76.
Song, & Yarbrough. (1978). Tax ethics and taxpayer attitudes: A survey. Public administration review, 442-452.
Spicer, & Becker. (1980). Fiscal inequity and tax evasion: An experimental approach. National Tax Journal, 171-175.
Wartick. (1994). Legislative justification and the perceived fairness of tax law changes: A referent cognitions theory approach. The Journal of the American Taxation Association, 16(2), 106.
How to Cite
CHE AZMI, Anna Azriati et al. The Mediating Effect of Tax Fairness on the Relationship Between Knowledge, Complexity and Voluntary Tax Compliance. Asian Journal of Accounting Perspectives, [S.l.], p. 1-12, dec. 2016. ISSN 0128-0384. Available at: <>. Date accessed: 20 oct. 2017.