The Mediating Impact of Trust on the Role of Power towards Tax Compliance: Empirical Evidence from Malaysia

Abstract

Manuscript type: Research paper
Research aims: This study examines the impact of power on voluntary
and enforced tax compliance behaviour and the mediating impact of trust
on the relationship between institutional power and tax compliance in
Malaysia.
Design/Methodology/Approach: Utilising survey method the data was
collected from Malaysian individual taxpayers as respondents through
multistage cluster and purposive sampling method.
Research findings: Coercive power significantly drives enforced
compliance, whereas legitimate power only influences voluntary
compliance when fully mediated by trust in government and the tax
authority (IRBM).
Theoretical contribution/Originality: This study integrates Social
Influence Theory and Social Exchange Theory and extends the Slippery
Slope Framework to an emerging ASEAN economy, demonstrating that
while the impact of legitimate power is fully mediated by trust, coercive
power operates via complementary partial mediation.
Practitioner/Policy implication: Results suggest that the IRBM must
prioritise institutional trust-building over mere service improvements to
successfully transition from enforcement-driven to voluntary compliance
regimes.
Research limitation: The cross-sectional design limits longitudinal
insights; future research should incorporate qualitative interviews to
explore shifting political trust.