Review of the Tax Audit Framework in the National Tax Administration

Abstract

This study examines the perspective of the National Tax Administration regarding tax auditing and the concepts of compliance and non-compliance with tax laws. Tax compliance is defined as adherence by taxpayers to tax obligations and regulations (full compliance), while tax auditing is aimed at reconciling the information provided in tax returns, financial statements, accounting records, and taxpayer documents with relevant laws, regulations, and the administration’s information databases. In contrast, non-compliance is interpreted as tax evasion and avoidance. One of the primary objectives of tax authorities in all countries is the collection of taxes with minimal administrative costs through compliance and full adherence to tax laws. Therefore, the dominant strategy for tax management is to encourage taxpayers' voluntary tax payments by increasing their trust in the tax system and reducing compliance costs. However, in the tax collection process, some taxpayers, either deliberately or negligently, fail to fulfill their obligations due to weaknesses in the tax administration and certain deficiencies in tax laws and regulations. Although completely eradicating this phenomenon in any country’s tax system is almost impossible, many tax administrations, with full awareness of this reality, continuously seek to reduce and minimize instances of non-compliance through the design, implementation, and enforcement of risk management programs and mandatory regulations.