BESHINCHI KENGASH. MILLIY IQTISODIYOTDA BARQAROR RIVOJLANISH: MOLIYAVIY TIZIM, INNOVATSIYALAR, TURIZM VA TADBIRKORLIKNI RIVOJLANTIRISHNING USTUVOR YOʻNALISHLARI

423 BESHINCHI KENGASH. MILLIY IQTISODIYOTDA BARQAROR RIVOJLANISH: MOLIYAVIY TIZIM, INNOVATSIYALAR, TURIZM VA TADBIRKORLIKNI RIVOJLANTIRISHNING USTUVOR YOʻNALISHLARI SMES’ INTENTIONS TO PARTICIPATE IN THE SPECIAL VOLUNTARY DISCLOSURE PROGRAMME 2.0: INSIGHTS FROM MALAYSIA Saliza Abdul Aziz, Associate Professor, PhD, Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia, Malaysia, saliz[email protected]y Khamdamov Shakhzod Ilkhom o‘g‘li, PhD, Department of Business and Administration, Oriental University, Tashkent, Uzbekistan Boburbek Khakimov, Lecturer, Department of Business and Administration, Oriental University, Tashkent, Uzbekistan Abstract. Compliance with tax regulations among small and medium-sized enterprises (SMEs) in Malaysia has long been a challenge, as reflected in the low submission rates of income tax return forms (ITRF). Although the Special Voluntary Disclosure Programme (SVDP) 1.0 was previously introduced, SMEs continue to struggle with complex tax issues, limited accounting resources, and a lack of awareness regarding regulatory requirements. This study seeks to address these challenges by examining the factors influencing SMEs’ intention to participate in SVDP 2.0, guided by the Theory of Planned Behavior (TPB). The study focuses on determining the relationships among the factors of attitude, subjective norms, tax knowledge, enforcement of penalties, and willingness to participate among SME owners in Malaysia’s Northern Region with regard to SVDP. A quantitative research approach was employed, using an online questionnaire distributed via Google Forms to SME owners in four states in Malaysia, which are located in the Northern region, i.e., Perlis, Kedah, Pulau Pinang, and Perak. A total of 276 valid responses were collected and analyzed using SPSS software (version 29). The findings reveal a strong inclination among SME owners in the northern region to participate in the SVDP to ensure tax compliance. It is supported that attitude, subjective norm, tax knowledge, and enforcement of penalties are significantly related to the intention to participate in SVDP among SMEs in the northern region. This highlights the need for tailored policies and support mechanisms to enhance engagement and compliance. This study contributes to the theoretical understanding of tax compliance behavior by addressing 424 existing research gaps and offering practical recommendations. Implementing these strategies can foster a more supportive environment for SMEs to engage in voluntary disclosure initiatives, thereby strengthening overall tax compliance and contributing to sustainable economic growth. Keywords: Intention, Attitude, Subjective Norms, Tax Knowledge, Enforcement of Penalty. 1.0. INTRODUCTION Taxation is a mandatory financial levy imposed by the government on individuals and entities (Tax Foundation, 2024). The revenue generated from taxes plays a vital role in funding national expenditures, including the provision of public infrastructure, wealth redistribution, economic regulation, and inflation control. Tax policies, however, vary across countries and frequently give rise to debate and differing perspectives. In Malaysia, the Inland Revenue Board of Malaysia (IRBM) has been consistently enhancing its service framework by transitioning from a formal assessment system to a self-assessment system (STS) since the assessment years 2001 for companies and 2004 for non-company taxpayers, including individuals. This shift aims to bolster tax compliance rates. As part of this effort, IRBM has introduced e-Filing and ByrHasil systems to streamline taxpayers' activities in income declaration and payments (Bernama, 2017). Taxpayers can declare income and compute tax liabilities without the need to submit receipts or supporting documents upfront via e-Filing. These documents are only required to be sent to IRBM via email if requested during the tax audit process. Nevertheless, despite these measures, some parties persist in attempting to evade or circumvent their tax obligations (Saad, 2012). Despite the ease in the tax process, tax non-compliance is still a major problem for tax authorities in many countries, including Malaysia. Tax compliance generally refers to the degree to which taxpayers fulfill their tax obligations, which include filing returns on time, accurately reporting income, paying the taxes owed, and adhering to relevant tax laws and regulations. In Malaysia, as in many countries, achieving high levels of tax compliance is crucial for generating revenue, ensuring fairness, and promoting good governance. The Inland Revenue Board of Malaysia (IRBM) has identified significant amounts of unpaid taxes. For instance, between January 1, 2024, and August 31, 2025, the IRBM discovered additional tax liabilities totaling approximately RM15.2 billion from companies and about RM1.75 billion from individuals, amounting to a combined total of around RM16.95 billion, including penalties (Bernama, 2025). To address the issue of noncompliance, the IRBM is encouraging voluntary disclosures, which can help reduce penalties compared to audits and investigations. Accordingly, the Malaysian Ministry of Finance (MoF) introduced the Special Voluntary Disclosure Programme (SVDP) to enhance tax compliance among Malaysians, assigning the IRBM to oversee its implementation. Originally introduced as SVDP 1.0 subsequent to the unveiling of the 2019 Budget on November 2, 2018, it operated from November 3, 2018, until September 30, 2019 (Sinar Harian, 2024). During this period, the program facilitated the collection of RM7.88 billion in total 425 taxes, additional taxes, and penalties from 286,428 taxpayers (Berita Harian, 2020). Additionally, SVDP 1.0 attracted 11,176 new taxpayers with a huge amount of assessment from various activities, i.e., income tax return form, audit, investigation, special operation, special action, income tax, real property gain tax, as well as stamp duty. Considering the success of SVDP 1.0 in 2019, SVDP 2.0 was launched from June 6, 2023 to May 31, 2024. The primary aim of SVDP 2.0 was to encourage more taxpayers to come forward and rectify any tax discrepancies without facing penalties. The ultimate goal was to enhance tax compliance and bolster revenue collection. By January 31, 2024, IRBM had received a total of 64,748 voluntary declaration cases from both new and existing taxpayers in all categories (KPMG, 2023). Initiatives such as the SVDP have shown promise of increasing compliance rates. However, this paper focuses on SMEs as it is claimed that regulatory and administrative burdens on SMEs (BusinessToday, 2024). This is mainly due to SMEs often lacking the resources (financial, human, technical) to meet tax compliance obligations. It is claimed that due to limitations of hiring in-house tax experts, and external agents cost money (BusinessToday, 2024). In addition to the high cost of compliance in terms of time and effort for smaller businesses, simplification is often recommended to this group (Aziz, Bidin, & Marimuthu, 2017). Hence, the questions raised in this paper: what are the relationships between attitude, subjective norms, tax knowledge, enforcement of penalty, and intention to participate in SVDP among SME owners in Malaysia, focusing on the northern region? 2.0. LITERATURE REVIEW This literature review examines key factors influencing SME owners’ intention to participate in the SVDP within the Northern Region. Factors such as attitude, subjective norms, tax knowledge, and enforcement of penalties are analyzed to better understand their collective impact on participation intentions. 2.1. Small and Medium-Sized Enterprises (SMEs) SME status applies to entities established in Malaysia under the Companies Act 2016, registered under the Business Registration Act (1956) or the Limited Liability Partnership Act (2012), registered with authorities in Sabah and Sarawak, or registered under specific statutory bodies for professional service providers below RM25 million or a workforce of fewer than 150 full-time employees. IRBM categorizes SMEs as follows (refer Table 1): Table 1 SMEs Categories Categories Micro Small Medium Factory Revenue under RM300,000 or a staff count of 5 or fewer. Revenue ranging from RM300,000 to RM15 million, or a workforce comprising 5 to 75 full-time employees. Revenue ranging from RM15 million to RM50 million or a workforce consisting of 75 to 200 full-time employees. 426 Services and other sector Revenue under RM300,000 or a staff count of 5 or fewer. Generate revenue ranging from RM300,000 to RM3 million or employ a workforce of 5 to 30 individuals. Revenue ranging from RM3 million to RM20 million or a workforce of 30 to 75 full-time employees. Source: IRBM (2024) 2.2. Special Voluntary Disclosure Programme in Malaysia (SVDP) Special Voluntary Disclosure Programme (SVDP) is a tax amnesty programme that encourages taxpayers to declare unreported income voluntarily and pay the relevant taxes. The programme has been implemented in various countries worldwide, including Malaysia, Indonesia, and Singapore, to increase state budget revenues and streamline development programmes. The SVDP is the third programme implemented in Malaysia after the tax amnesty programme that was implemented in 2015 and 2016. It is part of a series of initiatives aimed at improving tax compliance. All three programmes share the same objective of incentivizing taxpayers to declare their income (LHDNM, 2018). Similar to 2015 and 2016, this SVDP is an effort to increase government revenue by encouraging greater participation and transparency in tax reporting. During the 2023 revised Budget presented on 24 February 2023, the Special Voluntary Disclosure Programme (SVDP) or SVDP 2.0 was reintroduced (Soh, 2023). SVDP 2.0 aims to bolster tax compliance and expand the nation's tax base. Running from June 6, 2023, to May 31, 2024, this initiative offers taxpayers a golden chance to rectify their tax affairs and begin afresh. Taxpayers who voluntarily disclose unreported taxes will be eligible for a complete penalty waiver. 3.0. METHODOLOGY This study investigates the factors influencing SME owners’ willingness to participate in the SVDP within Malaysia’s Northern Region. A quantitative approach was adopted using a structured questionnaire distributed to SME entrepreneurs in Perlis, Kedah, Penang, and Perak. The collected data were used to assess the study variables and test the proposed hypotheses. The study focuses on SME owners in Malaysia’s Northern Region, encompassing Perlis, Kedah, Pulau Pinang, and Perak. Given the large population of 484,749 registered businesses (Companies Commission of Malaysia, CBID), a random probability sampling method was employed. A total of 276 SME owners were selected, representing an adequate sample size consistent with the recommendations of Kadam and Bhalerao (2010) and Sekaran (2016). The survey was distributed via email to members of the Malay, Chinese, and Indian Chambers of Commerce, as well as through online channels targeting business networks within the region. 4.0. FINDINGS 4.1. Demography of Respondents In total of the 276 respondents, 170 were identified as male, representing 61.6%. Conversely, 106 participants were identified as female, constituting 38.4%. In terms of 427 racial distribution, the majority, comprising 42.8% (n = 118) of the sample, identified as Malay. Indian individuals accounted for 40.2% (n = 111), making them the secondlargest group. Chinese respondents constituted 15.2% (n = 42) of the population. Lastly, those categorized as "Others" represented a smaller proportion, comprising only 1.8% (n = 5) of the total sample. The breakdown of respondents' profiles by state indicates that 4.0% of respondents (n = 11) are from Perlis, 31.2% (n = 86) from Kedah, 21.7% (n = 60) from Pulau Pinang, and 43.1% (n = 119) from Perak. The survey data reveal that the majority of respondents, comprising 37.0% (n = 102), fell within the age range of 30 to 40 years old. Following closely behind, 33.3% (n = 92) of participants were aged between 41 and 50 years. Additionally, 26.1% (n = 72) of respondents were younger than 30 years old. Lastly, a smaller proportion, accounting for 3.6% (n = 10) of participants, were older than 50 years. The respondents' profile, categorized by business type, indicates that 195 individuals (70.7%) are employed in manufacturing, while the remaining 81 (29.3%) work across services and other sectors. The category of respondents is based on the size of their businesses. The majority, constituting 61.2% (n = 169), were classified as micro-enterprises, defined by a turnover of less than RM300,000 and fewer than 5 employees. Small manufacturing entities accounted for 18.1% (n = 50) of the respondents, while 17.0% (n = 47) represented small services and other sectors, characterized by a turnover ranging from RM300,000 to RM3 million and an employee count of 5 to 30 people. Additionally, 1.1% (n = 3) fell into the category of medium manufacturing, with turnovers between RM15 million and RM50 million, employing 75 to 200 people. Finally, 2.6% (n = 7) were classified as medium services and other sectors, with turnovers ranging from RM3 million to RM20 million and employing 30 to 75 individuals. 4.2. Multiple Regression Analysis The results of this study are to answer the objective, which is to determine the relationships between attitude, subjective norms, tax knowledge, enforcement of penalty, and intention to participate among small and medium-sized enterprises (SMEs) owners in the northern region in the SVDP. Multiple linear regression analysis was carried out with four (4) factors as important predictive variables, i.e., attitude, subjective norm, tax knowledge, and enforcement of penalty. The results showed that the prediction model for intention to participate was significant [F (4, 271) = 145.924, p < 0.05], and the R-square of this model was 0.683, which means this model explained 68.3% of the variance of intention to participate (refer Table 2). The outcomes show a significant relationship between attitude and intention to participate, ß = 0.201, t (271) = 5.054, p < 0.01. There is also a significant relationship between subjective norm and intention to participate, ß = 0.408, t (271) = 8.758, p < 0.01. There is a significant relationship between tax knowledge and intention to participate, ß = 0.390, t (271) = 10.892, p < 0.01. There is a significant relationship too between enforcement of penalty and intention to participate, ß = 0.137, t (271) = 3.210, p < 0.01. Based on the results, the four (4) hypotheses proposed for this paper are accepted and supported. Among the beta values, subjective norm is the highest (0.408), 428 which indicates it is the most important factor that influences the intention to participate. This is followed by tax knowledge (0.390), attitude (0.201), and lastly, enforcement of penalty (0.137). Table 2 Multiple Regression Analysis (n=276) Model Unstandardize d Coefficients Stand ardized Coefficien ts t Sig. P B Std. Error Beta 1 (Constant) 1.288 .138 9.29 7 .000 Attitude .160 .032 .201 5.05 4 .000 Subjective norm .227 .026 .408 8.75 8 .000 Tax knowledge .264 .024 .390 10.8 92 .000 Enforcement of penalties .076 .024 .137 3.21 0 .001 a. Dependent Variable: Intention to participate R-square = 0.683, F (4, 271) = 145.924, Sig. F = 0.000 The results of the multiple regression analysis provide valuable insights into the relationships between various factors and the intention to participate among SME owners in the northern region regarding the SVDP (presumably, referring to a specific tax or economic development programme). Firstly, the significant relationships between attitude, subjective norms, tax knowledge, enforcement of penalty, and intention to participate underscore the complexity of factors influencing SME owners' decision-making regarding participation in the program. The finding that subjective norm has the highest beta value (0.408), indicating its significant influence on intention to participate, suggests that social influences and perceptions of what others expect play a pivotal role in SME owners' decision-making. The substantial impact of tax knowledge (beta value of 0.390) highlights the importance of SME owners' understanding of taxation policies and procedures in shaping their intention to participate. Furthermore, the positive relationship between attitude and intention to participate (beta value of 0.201) indicates that SME owners' favorable perceptions or beliefs about the program contribute to their willingness to engage with it. Lastly, the significant relationship between enforcement of penalty and intention to participate (beta value of 0.137) suggests that while enforcement measures may exert some influence on SME owners' decisions, their impact is relatively weaker compared to other factors such as subjective norms and tax knowledge. 429 In conclusion, the findings underscore the multifaceted nature of factors influencing SME owners' intention to participate in the programme, with subjective norms, tax knowledge, and attitudes playing prominent roles. Addressing these factors through targeted interventions and educational initiatives can potentially enhance SME participation and contribute to the success of the programme. 5.0. CONCLUSION This study sheds light on the key determinants influencing SMEs’ intentions to participate in the Special Voluntary Disclosure Programme 2.0 (SVDP 2.0) in Malaysia. Grounded in the Theory of Planned Behavior, the findings reveal that attitude, subjective norms, tax knowledge, and enforcement of penalties significantly shape SMEs’ willingness to engage in voluntary disclosure initiatives. These results underscore the importance of fostering positive perceptions toward tax compliance, enhancing awareness, and strengthening enforcement mechanisms to encourage participation. From a theoretical perspective, this research extends the understanding of tax compliance behavior within the SME context, providing empirical evidence on the behavioral drivers of voluntary disclosure. Practically, the insights offer policymakers and tax authorities a basis for designing more effective outreach, education, and support programs that align with SMEs’ behavioral motivations and operational realities. 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