Does Tax Plays an Important Role among E-commerce Businesses in Malaysia?

Document Type : Research Paper


, Senior Lecturer, Ph.D., Accounting Section, UniKL Business School, Universiti Kuala Lumpur, Jalan Pesiaran Gurney, Kampung Datuk Keramat, 54000 Kuala Lumpur, Malaysia.


The E-commerce has been grown rapidly with the rise in the number of business entities. The expansion of e-commerce businesses, however, has created challenges to the tax authorities around the world. Due to the way in which e-commerce is being carry out, it may provide tax planning opportunities. This study aims to explore whether businesses that conducted e-commerce in Malaysia has the intention to do tax planning. Interviews were conducted with e-commerce business administrators. Result indicates that tax issues is not the main motivations for companies to do e-commerce. This indicates that other factors are more important for e-commerce businesses to consider in their planning stage


Abd Hamid, N., Ibrahim, N. A., Ibrahim, N. A., Ariffin, N., Taharin, R., and Jelani, F. A. (2019). Factors affecting tax compliance among Malaysian SMEs in e-commerce business. International Journal of Asian Social Science,9(1), 74-85.
Ahmad, S.Z., A.R. Abu Bakar, T.M. Faziharudean and K.A. Mohamad Zaki, (2015). An empirical study of factors affecting e-commerce adoption among small-and medium-sized enterprises in a developing country: Evidence from Malaysia. Information Technology for Development, 21(4): 555-572. Available at:
Akcaoglu, E. (2002). International Taxation of Electronic Commerce: A Focus on the Permanent Establishment.
Agrawal, N. and Agrawal, K. (2014), Impact of E-commerce on Taxation, International Journal of Information and Computation Technology, Volume 4, Number 1, Pp. 99-106
Carnaghan, C., P. Downer, K. Klassen, and J. Pittman. (2004). E-Commerce and Tax Planning: Canadian Experiences. Canadian Accounting Perspectives, 3(2): 261-287.
Creswell, J. W., and Poth, C. N. (2016). Qualitative inquiry and research design: Choosing among five approaches. Sage publications.
Grandview research (2020). Retrieved September 15, 2020
Hamad, H., Elbeltagi, I., and El-Gohary, H. (2018). An empirical investigation of business-tobusiness e-commerce adoption and its impact on SMEs competitive advantage: The case of Egyptian manufacturing SMEs. Strategic Change, 27(3), 209-229.
Ismail, N.A. and M. M. Masud (2020), ‘Prospects and Challenges in Improving E-Commerce Connectivity in Malaysia’, in Chen, L. and F. Kimura (eds.), E-commerce Connectivity in ASEAN. Jakarta, Indonesia: Economic Research Institute for ASEAN and East Asia, pp.78-98.
JP Morgan (2019) E-commerce Payments Trends: Malaysia. Retrieved September 15, 2020
Klassen, K. J., Laplante, S. K., and Carnaghan, C. (2014). A model of multinational income shifting and an application to tax planning with e-commerce. The Journal of the American Taxation Association, 36, 27–53.
Li. C. (2011) Notice of Retraction: Tax administration in e-commerce: Base on B2C and C2C, International Conference on E-Business and E-Government (ICEE), Shanghai, China, 2011, pp. 1-4, doi: 10.1109/ICEBEG.2011.5882035.
Maya Bacacheā€Beauvallet, Francis Bloch, (2017) Special issue on taxation in the digital economy, Journal of Public Economic Theory, 10.1111/jpet.12285, 20, 1, (5-8),
OECD (2015). Addressing the Tax Challenges of the Digital Economy, Action 1 (2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project), OECD Publishing, Paris. Available at:
Omar, A., T. Ramayah, L.B. Lin, O. Mohamad and M. Marimuthu, (2011). Determining factors for the usage of web-based marketing applications among small medium enterprises (SMEs) in Malaysia. Journal of Marketing Development and Competitiveness, 5(2): 70–86
Sidik, M.H.J (2018) The Impact of Online Business on Malaysian Taxation, International Journal of Engineering and Technology 4 (7.29), 53-55
Turban, E., King, D., Lee, J. K., Liang, T. P., and Turban, D. C. (2015). Electronic Commerce: A Managerial and Social Networks Perspective. Springer Texts in Business and Economics (Eighth, Vol. 102). New York: Springer International Publishing.
Yeo, A. A., Lim, T. C., and Azhar, Z. (2019). Exploring Malaysian E-Commerce Taxation: A Qualitative Insight of Online Businesses. Journal of Contemporary Issues and Thought, 9, 75-85.
Zainal, N. F. and Mat Udin, N. (2015) The impacts and challenges of electronic commerce on taxation.: International Conference on E-Commerce (ICoEC) 2015, 20-22 Oktober 2015, Kuching, Sarawak, Malaysia.