An-Najah Staff

Abstract This study aimed to identify the reality of the internal control system at the tax departments in Palestine and its impact on tax evasion. From this perspective, the researcher attempted to identify the concept of internal control systems and evaluate the reality of the internal control system adopted by the various tax departments including internal revenue service (IRS), properties tax department, value-added tax (VAT), and customs tax department in addition to the Ministry of Finance. The researcher reviewed the related previous literature and studies in order to determine the theoretical frame of the present study. In order to reach the findings, the researcher used the analytical descriptive methodology. A questionnaire was designed as an instrument for the study including two topics represented by the evaluation of the internal control system and the impact of the internal control system on tax evasion. The questionnaire was distributed on the study sample (n. 170) that was selected from the employees of the various tax departments in addition to related employees at the Ministry of Finance. The researcher herself distributed and retrieved all the copies of the questionnaire since she was personally present in order to make sure that the questionnaire is completed and retrieved on the location. The value of consistency coefficients of both fields of the study instrument were (0.89 and 0.84) at the Alpha Cronbach Scale respectively, which are high and adequate for academic research purposes. The researcher also used another study instrument which was personal interviews with directors of various tax departments or their representatives in order to identify points of weakness or strength of internal control system adopted at the related departments. The study findings showed that the reality of the internal control system at the tax departments in Palestine was so high that it reached 79.6%, which represents a high percentage. The study findings also showed that level of the impact of the internal control system on tax evasion was also high (83%) which highlights the significant impact of the internal control system on tax evasion. Based on the study findings, the researcher put forward the following recommendations: 1) It is necessary to promote the importance of internal control system at the tax departments more than before. 2) It is necessary to publish a guide book that includes detailed procedures for each control process based on types and fields of work of parties subject to this control and applying them practically. 3) It is necessary to use new techniques to the evaluation process of performance and tasks of those employees in order to identify the points of weakness and strength and the potentials of correction. 4) It is necessary to update the system that determines the specializations, responsibilities, and jurisdictions of each department in order to delimit tax evasion.