{"title":"Examining Corporate Tax Evaders: Evidence from the Finalized Audit Cases","authors":"Ming Ling Lai, Zalilawati Yaacob, Normah Omar, Norashikin Abdul Aziz, Bee Wah Yap","volume":78,"journal":"International Journal of Economics and Management Engineering","pagesStart":1378,"pagesEnd":1383,"ISSN":"1307-6892","URL":"https:\/\/publications.waset.org\/pdf\/7346","abstract":"This paper aims to (1) analyze the profiles of\r\ntransgressors (detected evaders); (2) examine reason(s) that triggered a\r\ntax audit, causes of tax evasion, audit timeframe and tax penalty\r\ncharged; and (3) to assess if tax auditors followed the guidelines as\r\nstated in the 'Tax Audit Framework' when conducting tax audits. In\r\n2011, the Inland Revenue Board Malaysia (IRBM) had audited and\r\nfinalized 557 company cases. With official permission, data of all the\r\n557 cases were obtained from the IRBM. Of these, a total of 421 cases\r\nwith complete information were analyzed. About 58.1% was small and\r\nmedium corporations and from the construction industry (32.8%). The\r\nselection for tax audit was based on risk analysis (66.8%), information\r\nfrom third party (11.1%), and firm with low profitability or fluctuating\r\nprofit pattern (7.8%). The three persistent causes of tax evasion by\r\nfirms were over claimed expenses (46.8%), fraudulent reporting of\r\nincome (38.5%) and overstating purchases (10.5%). These findings\r\nare consistent with past literature. Results showed that tax auditors\r\ntook six to 18 months to close audit cases. More than half of tax\r\nevaders were fined 45% on additional tax raised during audit for the\r\nfirst offence. The study found tax auditors did follow the guidelines in\r\nthe 'Tax Audit Framework' in audit selection, settlement and penalty\r\nimposition.","references":"[1] Spicer, M.W. and S.B. Lundstedt, Understanding tax evasion. 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