The first factor affecting tax non-compliance is the tax knowledge. Tax knowledge refers to the understanding of the tax legislation, in another word it is meant to comprehend the laws and regulations of taxation (Singh, 2003). According to (Loo, et al., 2009), in Malaysia tax knowledge is seen to be one of the most influential factors to determine taxpayers’ compliance behavior under the self-assessment system. It is also known by many scholars that having tax knowledge can lead to higher compliance rates. However, it can also result to non-compliance behavior among taxpayers, either intentionally or unintentionally. For instance, many individuals tend to not be aware of their tax knowledge thus can lead to an unintentional non-compliance. Loo et al. (2009) added that, taxpayers in Malaysia, unintentionally committed mistakes in their tax returns forms. Moreover, a study done by Noor Suhaila and Sarifah (2008) claimed that in Malaysia individuals have low level of tax knowledge. The occurrence of tax non-compliance is due to the inaccuracy of information than the deficiency of information (Corchón, 1992). As such, taxpayers should possess in-depth tax knowledge to avoid tax non-compliance. Thus, , to reduce the tax non-compliance in Malaysia, the local tax authority named Inland Revenue Board Malaysia (IRBM), should conduct tax education programs to allow the public to understand the Self-Assessment System (SAS) and thus to increase awareness in fulfilling their duty as taxpayers (Kasipillai and Mustafa, 2000).
It is known that laws, in general, are very complex to understand with its jargons and terminologies without a proper learning platform, however, that same rule goes with the tax laws. As such, to avoid misinterpretation and misunderstanding of the tax laws, it will be better for the IRBM to put in place an educational learning platform. Hence, with a sufficient tax knowledge, taxpayers will be able to understand the taxation system and its policies. This will eventually enhance taxpayers’ compliance behavior and increase their awareness in fulfilling their duty. The role of the IRBM should not only to collect the tax payment from taxpayers and conducting tax audits but should as well promote and encourage on tax knowledge and tax education.