Drivers Of E-Tax Services Adoption and Impact on MSME Tax Compliance: A Conceptual Framework

International Postgraduate Conference on Accounting and Finance (IPCAF 2025) 2 May 2025 Kuala Lumpur e-ISBN: 978-967-0760-39-1 Publish Date: 14 October 2025 1 Paper ID: IPCAF202522 DOI: Salehah Zafirah Zulkepli1* 1 Faculty of Accountancy, Universiti Teknologi MARA, Pahang Branch, Jengka Campus, Bandar Tun Razak *Corresponding author: [email protected] ABSTRACT Micro, small, and medium enterprises (MSMEs) are vital to economic development, yet they often struggle with tax compliance due to procedural burdens and digital capacity gaps. The adoption of e-tax services is seen as a key solution to enhance compliance, but uptake among MSMEs remains uneven. This conceptual paper examines the factors influencing e-tax service adoption and their impact on tax compliance among MSMEs. Theories from the Technology Acceptance Model (TAM), Unified Theory of Acceptance and Use of Technology (UTAUT), and behavioral economics (TPB), the paper develops a conceptual framework linking perceived usefulness, ease of use, facilitating conditions, social influence, attitude and perceived risk to adoption outcomes. The framework offers a foundation for empirical validation and guidance for tax authorities in tailoring digital service strategies for MSMEs. Keywords: e-tax services, digital adoption, MSMEs, tax compliance, conceptual framework 1. INTRODUCTION MSMEs represent a significant share of national economies, particularly in emerging markets. The digitalisation of tax administration is expected to lower compliance costs and promoting voluntary tax compliance for micro, small and medium-sized enterprises (MSMEs). For Micro, Small, and Medium Enterprises (MSMEs), a sector that contributes approximately 90% of businesses and over 50% of employment worldwide (World Bank, 2022). Despite their importance, tax compliance among MSMEs remains inconsistent, particularly in developing economies (OECD, 2022). They often face low levels of tax compliance due to high procedural costs, lack of formal accounting systems, and perceived complexity in dealing with tax authorities. Implementing e-tax services such as e-filing, e-registration, e-stamping, and e-payments aims to simplify tax obligations and improve compliance. This paper aims to integrate findings from the last five years 2020 until 2025 to explain (i) the drivers of e-tax service adoption among MSMEs and (ii) how adoption influences actual tax compliance. 2. LITERATURE REVIEW Numerous studies have explored the drivers influencing the adoption of e-tax services. Research grounded in the Technology Acceptance Model (TAM) highlights that perceived usefulness and International Postgraduate Conference on Accounting and Finance (IPCAF 2025) 2 May 2025 Kuala Lumpur e-ISBN: 978-967-0760-39-1 Publish Date: 14 October 2025 2 perceived ease of use are key determinants of adoption (Soneka & Phiri, 2019; Hikmah et al., 2023; Hung et al., 2024). If MSMEs find the e-tax system useful and easy to use, they are more likely to adopt the services, improving compliance rates. Beyond technological considerations, scholars have also drawn on the Unified Theory of Acceptance and Use of Technology (UTAUT), emphasizing elements such as facilitating conditions and social influence (Chitakala & Phiri, 2022; Tinta et al., 2024). Additionally, behavioral factors from Theory of Planned Behaviour like attitude (Abu Silake et al., 2024; Rwakihembo et al., 2024; Sadress & Bananuka, 2019) and perceived risk (Birru, 2021) have been identified as important influences on the use of e-tax services. MSMEs' attitudes toward the convenience, efficiency, or risk of e-tax platforms affect their likelihood of adopting them. Ultimately, many studies have found a positive relationship between e-tax services adoption and tax compliance such as Hung et al. (2024), Saptono et al. (2023), Puspita et al. (2023), Nguyen (2023), and Night & Bananuka (2019). The use of e-tax services can lead to greater accuracy in tax reporting, increased transparency, and a higher level of voluntary compliance among taxpayers, particularly within the MSME sector. These findings underscore the critical role that technological adoption plays in modernizing tax systems and enhancing revenue collection efforts. Despite the valuable insights provided by previous studies, there is still a notable gap in the literature. Specifically, few attempts have been made to integrate these diverse factors ranging from technological, behavioral, and environmental drivers to tailored to the unique characteristics and challenges faced by MSMEs. Addressing this gap, the present study seeks to consolidate the identified variables into a comprehensive conceptual model that not only explains e-tax service adoption among MSMEs but also examines its ultimate impact on tax compliance behavior. Therefore, this study aims to offer a more holistic understanding of the factors influencing digital tax compliance and to provide a structured foundation for future empirical investigations and policy interventions. 3. METHODOLOGY This conceptual paper applies a theory-driven synthesis of literature across digital adoption, taxation, and behavioral economics. Using structured review techniques, the study identifies key constructs influencing e-tax service uptake by MSMEs. The proposed framework integrates constructs from TAM (perceived usefulness and ease of use), UTAUT (facilitating conditions and social influence), and attitude, and perceived risk. The model is designed for future empirical testing using quantitative methods such as PLS-SEM or structural equation modelling in the MSME sector. 4. DISCUSSION AND CONCLUSION The proposed conceptual framework indicates that the success of e-tax services usage among MSMEs is influenced by a combination of technological, behavioral, and institutional factors. Among these, technological perceptions continue to play a dominant role during the initial stages of adoption. Specifically, higher levels of perceived usefulness and perceived ease of use consistently emerge as strong predictors of MSMEs’ intentions to embrace e-tax services. In addition to technological drivers, institutional factors also exert a crucial influence, particularly in bridging the gap between adoption intention and actual system usage. Elements such as facilitating condition including the availability of technical support, training programs, and infrastructure, play a vital role in empowering MSMEs to effectively engage with e-tax services. Furthermore, social influence, particularly from peers, professional accountants, and tax advisors, helps build confidence and fosters a supportive environment that encourages hesitant business owners to transition to digital tax filing. Given these findings, policymakers are urged to focus on both technological improvements and broader capacitybuilding initiatives. Enhancing the usability, reliability, and user support features of e-tax platforms is essential to lowering entry barriers for MSMEs. Overall, this conceptual framework offers a valuable, policy-relevant lens for understanding the multifaceted challenges and opportunities associated with MSME adoption of e-tax services. It provides a structured foundation for designing interventions that not only promote technology adoption but also strengthen tax compliance in the MSME sector. Future research should aim to empirically validate this framework across different industries, economic contexts, and geographical jurisdictions to ensure its robustness and to support a more inclusive and effective digital transformation of tax systems globally. International Postgraduate Conference on Accounting and Finance (IPCAF 2025) 2 May 2025 Kuala Lumpur e-ISBN: 978-967-0760-39-1 Publish Date: 14 October 2025 3 5. ACKNOWLEDGEMENT The authors thank Universiti Teknologi MARA for their support and acknowledge in completion of this paper. 6. REFERENCES Abu-Silake, S. A., Alshurafat, H., Alaqrabawi, M., & Shehadeh, M. (2024). 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