Factors Influencing Tax Awareness among E-Commerce SMEs in Malaysia: An Empirical Investigation

The rapid growth of e-commerce has introduced new challenges in tax compliance, particularly among small and medium enterprises (SMEs). This study investigates the key factors influencing tax awareness among e-commerce SMEs in Klang Valley, Malaysia. Given the online nature of these businesses, tax evasion has become a prevalent issue, with many owners assuming that their business activities may go undetected by tax authorities. The main objective of this study is to examine how tax knowledge, taxpayer attitudes, and tax penalties impact tax awareness among e-commerce business owners. A sample of 158 e-commerce SME owners was surveyed, and the data were analyzed using the Statistical Package for the Social Sciences (SPSS) version 27. The results of the regression analysis reveal a significant relationship between taxpayer attitudes and tax penalties with tax awareness. However, tax knowledge was found to have no significant effect on tax awareness. This study contributes to the understanding of the determinants of tax awareness in the digital business environment and provides valuable insights for policymakers and tax authorities in addressing tax evasion challenges. The findings can also assist e-commerce professionals in enhancing compliance and fulfilling their tax obligations effectively.