A study on manufacturers behavior towards tax evasion of sales tax in Inanam, Menggatal and KKIP imposed by Royal Malaysia Customs Departments / Valentino Mark James

Tax is one of the ways to finance expenditures and it plays an important role in increasing the government revenue. The amount of tax collected depends on the structure of the economy. When the taxation is ineffective, many companies including manufacturers would use this opportunity to avoid paying tax and tax evasion would be popular. Realizing the significant impact of tax evasion on the economy and a lack of study in this area for Sabah, this study attempts to fill the gap. Specifically, this study tries to determine factors that cause the manufacturers in Inanam, Menggatal and KKIP areas fail to file their sales tax returns which lead to tax evasion. The results show that tax burden faced by the manufacturers, manufacturers' poor attitude (not bothered or not committed), manufacturers' lack of knowledge of sales tax penalty, inefficiency of enforcement and ineffectiveness of administrative system has positive effect tax evasion.