Exploring A Potential Taxation Model for Taxing E-Commerce Transactions: A Malaysian Perspective

Abstract

Purpose: This study aimed to propose a suitable e-commerce tax model to enhance tax revenue collection from untapped and potential taxpayers, specifically online sellers in Malaysia. Design/methodology/approach: A qualitative approach was employed by conducting semi-structured interviews with 14 participants who are key stakeholders in the e-commerce environment. Findings: The findings of this study recommend taxing e-commerce transactions through payment service providers by replicating the country’s abolished GST system. This approach may also be applicable to other developing countries with lower tax compliance rates. Research limitations/implications: The proposed model in this study is able to solve issues related to taxing ecommerce. Since this study is exploratory, a more profound view is needed to ensure that the proposed e-commerce tax model can be executed adeptly. Future studies can be conducted to evaluate tax authorities’ readiness to implement the proposed e-commerce tax model. Additionally, a survey also can be performed to assess online sellers’ readiness for the potential implementation of the e-commerce tax model in the future. Originality/value: This study contributes significantly to the body of knowledge on taxation concerning the e-commerce tax method that can be utilised to enhance tax revenue collection most effectively from the Malaysian environment by adhering to the key tax principles by Smith (1776). The findings of this study can facilitate the tax authorities, policymakers and relevant parties to make a better-informed decision in establishing an e-commerce tax.