Using enterprise architecture to manage income tax compliance rate issues in Malaysia.

Abstract

Recent studies show that tax compliance is closely related to the tax return process. Suppose the electronic tax system can provide an efficient and fast tax return process. In that case, the tax compliance rate will significantly be improved. However, the current tax structures were built solely for tax purposes and lack of tax strategy and business considerations. Hence it becomes a passive transactional system that serves as the end-point taxpayer data that finally lead to taxpayer non-compliance. Nevertheless, Enterprise Architecture (EA) is a conceptual blueprint that defines the structure and operation of an organisation that align the business, data, application and technology. Therefore, this paper will investigate how EA can be a workable alternative in managing income tax enforcement problems in Malaysia. This study proposed to create a hybrid EA framework influenced by EA framework called TOGAF, Ishikawa Diagram and MyGovEA. As a result, a 'To-Be' Architecture of Malaysian Tax Return Process is proposed based on five considerations obtained from 'As-Is' analysis earlier on. This paper concludes that the tax compliance rate can potentially be improved if the tax agency can align the strategy, business process and tax systems together.