INTRINSIC AND EXTRINSIC MOTIVATION IN TAX COMPLIANCE BEHAVIOUR

Abstract

Tax compliance is a worthy area to be examined in Malaysia since government relies on tax revenue to fund its operations. Records from the Inland Revenue Board of Malaysia indicates that tax compliance is still an issue. Past studies in tax compliance indicate that many factors can influence the tax compliance behaviour of taxpayers. However, studies on intrinsic and extrinsic motivation in complying with the tax law are still scarce especially in Malaysia. This paper attempts to provide an overview into intrinsic and extrinsic motivation in complying with the tax law. A review of past relevant studies is presented and it can be concluded that intrinsic and extrinsic motivations can influence tax compliance behaviour. The review suggests that intrinsic motivation in tax context is normally associated with tax morale. Contrarily, extrinsic motivation in tax compliance is generally discussed as providing a positive inducement to increase tax compliance