Users’ Perceptions on Tax Disclosure in Malaysian Companies Annual Reports

The annual report is a document that provides key information for stakeholders to understand a company's performance to enable them to make decisions. This paper reports the results of an exploratory study on users' perceptions of the importance of tax disclosure, current state of tax disclosure and usefulness of more tax disclosure in the annual reports of listed companies in Malaysia. A survey questionnaire was used for data collection through the convenience sampling technique which elicited 207 usable questionnaires for analysis. Respondents include professionals, tax officers, management executives, academics and post-graduate students attending a tax seminar. The findings show that users of annual reports agree that the tax disclosure section is an important part in the annual report and more tax information must be disclosed. They believe that tax disclosure is beneficial in facilitating decision-making and assisting tax authorities in handling tax audits. Users also perceive that tax disclosure is limited, too technical to be interpreted and agree that more tax disclosure would be useful for stakeholders to comprehend companies' tax matters. This study recommends more research on tax disclosure to be conducted, including examining the disclosure behaviour of companies from various industries in Malaysia.