Indirect Tax Administration Efficiency of the Royal Malaysian Customs Department
Keywords:
Indirect Tax Administration, RMCD, Efficiency, Cost, RevenueAbstract
The method used to measure indirect tax administration efficiency is crucial; hence, this study will examine indirect tax administration efficiency using the cost-revenue ratio. Malaysia had experienced several changes in its indirect tax system where the shift of Malaysia’s indirect tax regime is linked to the efficiency of indirect tax administration. However, the lack of empirical research on this matter urges the current study to determine the trend of indirect tax administration efficiency level under the RMCD. In this study, secondary data were obtained from RMCD Annual Report, Ministry of Finance’s Federal Government Estimated Revenue Report, Budget Report, and Treasury Annual Report to examine the trend of RMCD’s tax administration efficiency level for 7 years (2013-2019). Both administration costs and total tax revenue collection were found to affect the efficiency level of the Royal Malaysian Customs Department (RMCD); however, there is no strong evidence to claim that administration costs indeed influence the total indirect tax revenue collection and vice-versa. Research findings and initial inputs from the RMCD Annual Reports are analysed to discuss and provide recommendations for future research works. The research findings provide important information for the RMCD and policymakers in improvising indirect tax administration.
References
Abas, A. (2018, January 25). GST-registered companies to enjoy fast tax refunds. New Straits Times.https://www.nst.com.my/news/nation/2018/01/328458/gst-registered-companies-enjoy-fast-taxrefunds
Abd Hamid, N., Yaacob, Z., Ibrahim, Z., Azizan, S. & Rashid, N. N. (2021). Socio-Economic Perspective of B40 Household Budgets in Malaysia. Journal of Contemporary Issues in Businessand Government, Vol 27(2).
Akitoby, B. (2018). Raising Revenue: Five country cases illustrate how best to improve tax collection. IMF Finance & Development, VOL. 55, NO.1.
Alink, Matthijs., & Victor V. K. (2016). Handbook on tax administration (Second Revised Edition). Amsterdam: IBFD.
Bagchi, Amaresh, Richard M., and Arindam D., (1995). An Economic Approach to Tax Administration Reform. Discussion Paper No. 3, International Centre for Tax Studies, University of Toronto.
BBC English Dictionary, (1993). London: Harper Collins Publishers.
Bernama, (2014, January 1). Kastam perkenal perisian komputer kepada peniaga berdaftar untukpantau GST. Bernama. https://www.astroawani.com/berita- malaysia/kastam-perkenal-perisiankomputer-kepada-peniaga-berdaftar-untuk-pantau- gst-27702
Bird, R. M. (1989). The Administrative Dimension of Tax Reform in Developing Countries, in: Gillis,
M. (ed.), Tax Reform in Developing Countries. Durham: Duke University Press.
Bird, R & Jantscher, M. C. (1992). 9 Assisting Taxpayers in Meeting Their Obligations Under the Lawin Improving Tax Administration in Developing Countries. USA: International Monetary Fund.https://doi.org/10.5089/9781557753175.071
Bird, R. (2010). Taxation and Development. World Bank - Economic Premise. 1-5.
Bughin, J. & Manyika, J. (2019). Twenty-five years of digitization: Ten insights into how to play itright. Digital Enterprise Show 21–23 May, Madrid May 2019. McKinsey Global Institute.
Cambridge International Dictionary of English, (1995). Cambridge: Cambridge University Press.
Chee, J. (2018, December 5). Malaysia introduces Sales and Service Tax (SST): What you need to know.
TMF Group. https://www.tmf-group.com/en/news-insights/articles/2018/december/malaysiaintroduces-sst/
Cummings, R., Vazquez, J., Mckee, M. & Torgler, B. (2005). Effects of Tax Morale on Tax Compliance: Experimental and Survey Evidence. RePEc wpaper. Center for Research in Economics, Management and the Arts (CREMA), Basel. CREMA Working Paper, No. 2005-29.
Dziemianowicz, R. (2017). Tax administrative costs as a component of tax transaction costs in Polandand other OECD countries. Ekonomia i Prawo. Economics and Law, 16(2): 123–140
Goode, R. (1981). Tax advice to developing countries: An historical survey. World Development Volume 21, Issue 1, Pages 37-53
Ishi, H. (1993). The Japanese Tax System. Oxford: Clarendon Press.
James, S. & Nobes, C. (1983). The Economics of Taxation. New Delhi: Heritage Publishers.
Kagan, J. (2019). Indirect Tax. In Investopedia. https://www.investopedia.com/terms/i/indirecttax.asp
Kaplanoglou, G. & Newbery, D. (2003). Indirect Taxation in Greece: Evaluation and Possible Reform. International Tax and Public Finance. 10. 511-533.
Kasipillai, J. (2006). A Comprehensive Guide to Malaysian Taxation-Under Self-Assessment. Second Edition. McGraw-Hill, Kuala Lumpur.
Kelly, P. L. & Oldman, O. (1973). Readings on Income Tax Administration. New York: The Foundation Press Inc.
Mansor, M., Tayib, M., & Yusof, R. (2005). Malaysian Indirect Tax Administration System: An Analysis of Efficiency and Taxpayers’ Perceptions. International Journal of Management Studies, 12(2), 19-40.
Mansor, N. F & Ilias, A. (2013). Goods and Services Tax (GST): A New Tax Reform in Malaysia. International Journal of Economics Business and Management Studies, 2(1), 12-19.
Ministry of Finance, (2019). 2020 Fiscal Outlook and Federal Government Revenue Estimates. Putrajaya.
Ministry of Finance, (2019). The 2020 Budget Speech. Treasury.https://www.treasury.gov.my/index.php/en/archives/2020/budget-speech-2020
Mohd. Jamel, N. E. S., Abd Hamid, N., Mohd Zawawi, S. N. H., Othman, R. D. & Sulaiman, S. (2021).
The Role of Tax Authorities in Public Acceptance of Indirect Tax in Malaysia. Jurnal Intelek, Vol16(1) p1-11.
Mustafa, H. M. H. (1996). An Evaluation of the Malaysian Tax Administrative System, and Taxpayers’ Perceptions Towards Assessment Systems, Tax Law Fairness, and Tax Law Complexity. Ph.D.
Dissertation, Universiti Utara Malaysia, Malaysia.
OECD, (2014). Addressing the Tax Challenges of the Digital Economy. OECD Publishing, Paris.https://www.oecd.org/tax/beps/public-consultation-document-addressing-the-tax-challenges-ofthe-digitalisation-of-the-economy.pdf
OECD, (2017). International VAT/GST Guidelines. OECD Publishing, Paris.http://dx.doi.org/10.1787/9789264271401-en
Pantamee, A. A. & Mansor, M. (2016). A Modernize Tax Administration Model for Revenue Generation. International Journal of Economics and Financial Issues, 2016, 6(S7) 192-196.
Rahman, A. (2009). Investment climate in practice: Tackling corruption through tax administrationreform. World Bank. https://openknowledge. worldbank. org/bitstream/handle/10986/1056, 4.
Rani, Kiran & Shayna, Kiran & Dhawan, Ashish. (2017). Making Sense of Prospects of Digital Education. Scholarly Research Journal for Interdisciplinary Studies, Vol-4/31.
RMCD, (2014). 2013 Royal Malaysian Customs Department Annual Report. Putrajaya.
RMC, (2017, February 2). Pelancaran Operasi CBOS 3.0 di JKDM WPKL. Portal rasmi JAbatan KAstam Diraja Malaysia. 20.2.2017_Pelancaran Operasi CBOS 3.0 di JKDM WPKL - Default(customs.gov.my)
Rosley, F. (2020). Simplifying tax administration and compliance can lead to higher collections. The Star Online.://www.thestar.com.my/business/business-news/2020/10/29/simplifying-taxadministration-and-compliance-can-lead-to-higher-collections
Rutgers, M. R., and van der Meer, H. (2010). The origins and restriction of efficiency in publicadministration: Regaining efficiency as the core value of public administration. Administration & Society, 42, 755-779.
Smith, J. S. (2018, July 12). What can Malaysia new SST learn from GST? International Tax Review.
ITR. http://www.internationaltaxreview.com/Article/3813859/
Taha, R. & Loganathan, N. (2008). Causality Between Tax Revenue and Government Spending in Malaysia. The International Journal of Business and Finance Research, The Institute for Businessand Finance Research, vol. 2(2), pages 63-73.
Tayib, M. (1998). The Determinants of Assessment Tax Collection: The Malaysian Local Authority Experience, Ph.D. Dissertation, University of Glamorgan, U.K.
The Malay Mail. (2017, February 20). Customs Dept targets RM3b GST collection through CBOS thisyear. The Malay Mail. https://www.malaymail.com/news/money/2017/02/20/customs-depttargets-rm3b-gst-collection-through-cbos-this-year/1319379
The World Bank, (2018). Taxes & Government Revenue. The World Bank.https://www.worldbank.org/en/topic/taxes-and-government-revenue
The World Bank, (2020). 2nd World Bank Tax Conference: Taxing Personal Income and Wealth in Developing Countries. The World Bank. https://www.worldbank.org/en/events/2020/01/23/taxingpersonal-income-and-wealth-in-developing-countries
Vlassenko, I. (2001). Evaluation of the Efficiency and Fairness of British, French and Sweedish
Property Tax Systems. Property Management (Bradford), 19(5), 384.
Wahlund, F. & Wahlberg V. (2017). Digitalization & Competence Management: A study ofdigitalization and competence management within the telecommunications industry. Master of Science Thesis in the Quality and Operations Management Program, Chalmers University of Technology.
Yaacob, Z., Abd Hamid, N., Kamal, N. F. S., Ghazali, N. & Shamsudin, R. (2018). Exploring the Challenges of Goods and Services Tax on Batik Manufacturers. International Journal on Engineering & Technology, Vol 7 (4), p.510-513
Ying, T.S. (2018). Economic Report 2019: Direct tax collection up 15%, but indirect tax down onethird. https://www.edgeprop.my/content/1440957/economic-report-2019-direct-tax- collection15-indirect-tax-down-one-third
Downloads
Published
Issue
Section
License
Copyright (c) 2025 Nur Azhari Mutahar, Nadiah Abd Hamid
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
