CHALLENGES AND STRATEGIC SOLUTIONS FOR INDIVIDUAL INCOME TAX COMPLIANCE IN MALAYSIA

Abstract

Individual income tax is an essential part of Malaysia’s national budget, providing the revenue needed for public services and national development. However, the country faces a persistent problem of low tax compliance caused by limited public understanding, complicated regulations, and low trust in government spending. This study aims to explore the key challenges influencing individual income tax compliance in Malaysia, analyse the effectiveness of digital tax systems, and propose strategic solutions to improve compliance rates. The research used a qualitative method by examining secondary data from government reports, official policies, and existing academic studies. The findings show that tax compliance in Malaysia is strongly influenced by the ease of using the tax system and the level of public trust in authorities. Many taxpayers find tax forms difficult to complete, and there is limited tax education for emerging groups of workers, such as those in the gig economy. To address these issues, the study recommends improving tax education programs, simplifying digital filing systems, and increasing transparency regarding the use of tax revenue. This paper contributes by offering practical strategies to improve tax compliance and strengthen the relationship between the government and taxpayers. These efforts are expected to support economic stability and sustainable national development in Malaysia.