With aims to increase the efficiency and ease of


the government services to people, several projects were identified as the core of the e-government applications in Malaysia. E-filing is one of the projects that introduced by government agency called LHDN (Lembaga Hasil Dalam Negeri).

Starting in 2006, citizens in Malaysia were able to choose among two tax-filing methods: manual and internet based or e-filing. Manual filing is the traditional method either by hand or typewriter. Taxpayers usually perform complex calculations using mental arithmetic or calculator, and then the return is delivered to the tax agency through the postal service or in person. Electronic tax-filing is a method that uses tax preparation mechanism provided by the agency; the forms can be directly transmitted to the tax agency through the internet. Calculation, error checking and suggestion for best return option for the taxpayer are carried out automatically. With the e-filing system, taxpayers and tax practitioners can file their income tax returns electronically via the enabling technologies, rather than through mail or physically visiting the tax offices. This may eventually make the art of tax filing and tax payment easier.

Although adoption of e-filing may seem to benefit taxpayers, however, the number of taxpayers using e-filing system in Malaysia is consider far below among the world. According to the annual Global e-Government Study of Brown University in the United States, the following countries- Taiwan, Singapore, United States, Hong Kong and China are ranked as the top 5 countries in the world with most sophisticated e-Government websites among the 198 countries surveyed. In the Asia-Pacific region, Malaysia and Japan were the 2 countries with lowest number of users making transactions using government online with just 12% and 13% respectively. Singapore leads the region with 53% although Australia has seen the most significant increase in online government service usage from 31% to 46%. (The Star, Nov 12, 2002).

Therefore, the importance of understanding and influencing citizens' acceptance of electronic system is critical. The present study intends to understand the determinants of taxpayers' adoption towards e-Filing. Understanding the determinants for adoption of e-filing will provide added leverage to enhance acceptance of e-Filing in the future. This study may help to develop an understanding on how to encourage Malaysian taxpayers to adopt e-filing in short period by examines on the social, cognitive and physiological components. The results from this study can be used by tax agency to either improve the system or utilize the information to find ways to attract new users to utilize e-Filing.

Aim and Objectives of Research

The aim of this research is to investigate the perceptions of e-filing in Malaysia in order to improve the acceptability of e-filing.

Research Question

What are the factors that affect taxpayers' adoption towards e-filing in Malaysia?

Research Objectives

  • To find out taxpayers' attitude towards e-filing in Malaysia.
  • To determine the significant predictors on adoption of e-filing.
  • To identify the impact of perceived ease of use and perceived usefulness on taxpayers' intention to adopt e-filing.
  • To measure the subjective norms, self-efficacy and facilitating conditions influence the decision to use e-filing.
  • To evaluate the perceptions of taxpayers towards perceived risk, trust and image.
  • To examine the relationship between taxpayers' satisfaction and behavior intention.

Literature Review

Over recent years, with the liberalization and globalization, fast delivery service is required a faster mechanism of transaction between government and its people. Internet has been used as a platform in almost all aspects of human living by government to provide services to citizens. Tax is one of the major priorities that had been identified by many officials in charge of introducing electronic government. Most of governments around the world have realized that electronic filing of tax, if properly used, is a way to improve efficiency in assessing and collecting tax information. It has the potential to improve tax-filing service while at the same time reducing costs to both taxpayers and tax collecting agencies.

Since 2006, both Malaysian and non-Malaysian citizens has been given the opportunity to choose either manual or the internet-based to file their tax-returns. However, the number of taxpayers using e-filing system is far below the expectation. According to an empirical report in newspaper, the user of e-filing in Malaysia only reached 448,742 users from 6.4 million taxpayers in the country (Izatun, 22/4/08, The Star). In an exploratory research conducted Ramayah et al (2006), the results have shown that many taxpayers did not use e-filing system to file their tax returns. One of the major issues identified in that study was related to the 16-digit PIN number that an e-filer must obtain directly from the income tax office. Further challenges found include the queuing up at income office to get the PIN number as well as e-filers' skeptical of security and privacy of their personal data information furnished in the online e-filing system.

Although e-filing seems provide benefits to taxpayers, but the intention to use e-filing is still low in Malaysia. Thus, the factors that affect taxpayers' adoption towards e-filing have to examined in order to given rise to an increased comfort with website tax preparation and increase the number of taxpayers on using e-filing. This study will focus on several factors such as perceived ease of use, perceived usefulness, subjective norms, self-efficacy, facilitating conditions, perceived risk, trust and image.

Perceived ease of use

Perceived ease of use is defined as the degree to which a person believes that using a particular system would be free of effort. This follows from the definition of "ease": "freedom from difficulty or great effort." Effort is a finite resource that a person may allocate to the various activities for which he or she is responsible (Radner and Rothschild, 1975). Information systems that users perceive easier to use and less complex will increase the likelihood of its adoption and usage (Teo et al, 1999). An application perceived to be easier to use than another is more likely to be accepted by users. Past research provides evidence of the significant effect of perceived ease of use on usage intention either directly or indirectly through its effect on perceived usefulness.( Agarwal & Prasad, 1999, Davis et al.,1989, Venkatesh, 1999;Venkatesh 2000;Venkatesh & Morris, 2000; Ramayah & Aafaqi 2004, Ramayah 2006a). In order to encourage tax payers in Malaysia to use e-Filing, it is paramount to understand the factors that influence the intention to use e-Filing.

Perceived of usefulness

Perceived usefulness was defined by Davis (1989) as “the degree to which the stakeholder perceives a particular system enhances job or performance (Davis, 1989, p. 320)”. This follows from the definition of the word useful: "capable of being used advantageously." Within an organizational context, people are generally reinforced for good performance by raises, promotions, bonuses, and other rewards (Pfeffer, 1982; Schein, 1980; Vroom, 1964). Besides that, perceived usefulness also is a prospective user's subjective probability that using certain electronic application system will increase his or her performance within an organizational context (Davis et al. 1989). A system high in perceived usefulness, in turn, is one for which a user believes in the existence of a positive use-performance relationship.

Computer Self-Efficacy

One of the most powerful theories of human behavior is the social cognitive theory. Social cognitive theory (Bandura, 1986) states that self efficacy as a direct determinant of individual's behavior. Self-efficacy is an individual's self-confidence in his or her ability to perform a behavior (Bandura, 1982); while facilitating conditions representing the resources needed to engage in a behavior (Triandis, 1971). According to (Chan & Lu, 2004) individual with high computer self-efficacy are expected to be able to competently use different software packages and computer systems while those with low self efficacy would perceive their capabilities as limited to particular software package or computer systems.

Facilitating conditions

An environment with proper facilitating conditions will promote the exhibition of the appropriate behavior (Triandis, 1979). Taylor and Todd (1995) suggested that facilitating conditions be made up of 2 aspects, namely resource facilitating conditions and technological facilitating conditions. Fu, Fan and Chao (2006) elaborated that the absence of facilitating resources results in barrier to usage which may inhibit usage. Thus, a taxpayer might be unwilling to accept e-filing if little or no computer equipment is available and if technical support is low. Facilitating condition was found to have a direct relationship on infusion and adoption of a number of new information system innovation (Cheung & Chang, 2000; Jones, Sundaraman & Chin, 2002).

Perceived Risk

A common and widely recognized obstacle to electronic commerce adoption has been the lack of security and privacy over the internet (Bhimani, 1996; Cockburn & Wilson, 1996; Quein & Klein, 1996). According to (Chan & Lu, 2004), this has led many people to view e-commerce and internet application as risky undertakings. Therefore in the context of this study, individuals who regard e-filing as low risk would have a tendency to accept and use e-filing. Frambach (1993,1995) contends that the speed of adoption is negatively related to the level of perceived risk. The perceived risk surrounding and innovation might cause a potential adopter to postpone the decision to adopt or reject the innovation. Users of e-filing are influenced by risks they perceive, whether or not such risk actually exists. Their perception of e-filing will affect their speed of adopting the system. Therefore, perceived risk was included as one of the determinants of perceived ease of use in the present study.


In innovation diffusion research, gain or elevation of social status has been considered an important motivation behind individuals' decision to adopt an innovation. Image has been defined as the degree to which use of an innovation is perceived to enhance one's image or status in one's social system (Moore and Benbasat, 1991). In somewhat similar vein, in marketing literature, social value, i.e. the utility derived from a product's ability to enhance an individual's self-concept has been empirically found to be a dimension of perceived value (Sweeney and Soutar, 2001). Plouffe et al., 2001 has reported that there is a significant positive effect of image on behavior intention.

Behavior Intention

Behavior intention is a measure of the strength of one's intention to perform a specified behavior. According to intention-based theories, user adoption and usage behavior are determined by the intention to use IT. It is a kind of “self prediction” or “behavioral expectation”, indicated as one of the most accurate predictors available for an individual's future behavior (Davis, 1989).


In conclusion, the factors that will affect the adoption of taxpayers towards e-filing should be investigate deeply, which is the perceived ease of use, perceived usefulness, subjective norms, self-efficacy, facilitating conditions, perceived risk, trust and image.

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