Determining factors of muslim consumers` perception towards income tax rebate over zakat on income :Malaysian perspective

Abstract

Malaysia is a multi-racial but Muslim majority country. Malaysian tax authority has introduced a rebate system on tax for their customers who pay both zakat and tax taking it as religious obligation to the creator Allah SWT and compulsory duty to the government. This study has been designed to explore the variables that affect Muslim consumers’ perception towards tax rebate through zakat system in Malaysia and to find out whether these variables play role positively or negatively; to check the conformity of Muslim consumers towards the government rules and religious obligations. In order to achieve the objectives, a conceptual research framework has been drawn based on the literature reviewed. In addition to this, a total number of 236 valid responses were collected through online survey from the Muslims residing in Malaysia. Statistical Package for Social Sciences (SPSS) and Analysis of Moment Structure (AMOS) have been applied to analyse the collected data. Six factors were extracted through principal component analysis and Structural Equation Modelling (SEM) was run to test the hypotheses. This research found that halal-haram aspect of Islamic Shariah is a very positive influential factor for the Muslim consumers’ perception towards the system of tax rebate over zakat on income. On the other hand, legal consciousness and knowledge about tax are also considered as positively significant factors for growing perceptions towards the tax rebate through zakat system. As there are not enough researches in this area, therefore, this study will definitely play an important leading role for the countries or policy makers or concerned zakat or tax institutions all over the world in capitalizing the practices which is highly and positively perceived by the Muslim consumers. Moreover, this study significantly contributes to the methodological, theoretical, empirical and practical development in the area of marketing especially in the service marketing. In addition, the finding of this study will also help Malaysian government and tax & zakat authorities to improve this tax rebate system further to satisfy their consumers.