The effect of internal controls on tax compliance in organization
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Date
2026-04-16
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Uganda Christian University
Abstract
This study investigated the effect of internal controls on tax compliance inorganizations, focusing on Link Bus Services Ltd in Uganda. Despite the presence of internal control systems, many organizations continue to face challenges such as
inaccurate tax declarations, delayed filings, and penalties. The study specificallyexamined the influence of record-keeping practices, segregation of duties, and internal audits on tax compliance. The study employed a descriptive research design with a population of 40 employees of the company, however, only 38 employees responded to the questionnaires which gave the study a 95% response rate. A structured questionnaire was used to collect the data from the employees. The data was analyzed using descriptive statistics and multiple linear regression analysis using the statistical package for social sciences (SPSS). The findings of the study revealed that there was a significant positive relationship between the practice of maintaining good record keeping and tax compliance within the organizations (β = 0.206, p = 0.037). Furthermore, the practice of conducting internal audits within an organization was also significantly positively related to the taxpayers’ compliance with the country’s tax laws (β = 0.265, p = 0.029). While a positive relationship was found between the segregation of duties within an organization and tax compliance, such a relationship was not statistically significant (β = 0.165, p = 0.063). The internal control measures analyzed in this study accounted for 19.3% of the total variation in the taxpayers’ compliance with the country’s tax laws. Recommendations for improvement in the taxpayers’ compliance with the country’s tax laws include improving record keeping practices within the organizations, providing training to the employees on these record keeping practices, and improving the organization’s internal audit functions. These findings will be of benefit to the managers of the organizations, the policymakers of the country,and the Uganda Revenue Authority as they seek to develop effective strategies to improve tax compliance within the taxpayer population of the country.
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Undergraduate