Noor Emilina Md Nasir¹, Norfadzilah Rashid^2♣, Tuan Zafierah Tuan Zainazor², and Siti Nasuha Muhmad¹

¹Faculty of Accountancy, Universiti Teknologi MARA Terengganu Branch, Malaysia
²School of Accountancy, Faculty of Business and Management, Universiti Sultan Zainal Abidin, Terengganu Malaysia

ABSTRACT

This study investigates the potential indicators of corporate tax fraud by assessing the effective tax rate amongst technology companies listed on Bursa Malaysia between 2016 and 2022. A final sample of 26 firms, accounting for 182 unique observations, was chosen for this study, excluding companies with negative pre-tax income and insufficient data. The panel data analysis was performed using both a Hausman test and a fixed effect model, highlighting the significant inverse relationships between financial distress and firm size with the constant factor. Descriptive statistics were provided to understand the nature of the dataset, with significant variances in the mean, median, and extreme values of all the variables under study. The trend of ETR from 2016 to 2022 was also investigated, providing further insights into the overall tax behaviour of these firms. The study revealed a significant negative relationship between financial distress and firm size towards corporate tax fraud. This research could help regulators, tax authorities, and corporate entities in their efforts to prevent and mitigate tax fraud, by understanding the financial markets that might indicate such tendencies.

Keywords: Corporate Tax Fraud, Effective Tax Rate; Financial Distress, Panel Data Analysis, Technology Companies