The Role of Internal Audits in Enhancing Compliance with Direct and Indirect Tax Regulations

Abstract

This paper examines the critical role that internal audits play in promoting and enforcing compliance with both direct and indirect tax regulations within organizations. Through a comprehensive review of existing literature and analysis of case studies, we demonstrate how well-designed and executed internal audit programs can significantly enhance tax compliance, reduce risks, and improve overall organizational governance related to taxation. The paper explores best practices in internal audit methodologies, discusses common challenges and pitfalls, and provides practical recommendations for optimizing the effectiveness of internal audits in achieving tax compliance objectives. We argue that in today's complex and evolving regulatory environment, internal audits are an essential tool for ensuring that organizations meet their tax obligations and mitigate potential penalties and reputational harm arising from non-compliance. The insights from this research are relevant for internal auditors, tax professionals, executives, board members, and regulators seeking to strengthen tax compliance frameworks.