Which Aspect of the Management Accounting System (MAS) Matters Most in Enhancing Tax Management in Manufacturing Firms?

Abstract

This study aimed to investigate the contribution of management accounting system (MAS) to tax management. The study establishes the aspect of a management accounting system that matters most in enhancing tax management in manufacturing firms. Using a cross-sectional research design, data were collected from 160 manufacturing firms in Uganda using a structured questionnaire. Data was analysed using the Statistical Package for Social Scientists v21 and smart partial least squares structural equation modelling (PLS–SEM). Results indicate that management accounting systems significantly contribute to effective tax management. Also, the aspect of broad scope contributes more than the other elements (aggregation, integration and timeliness) in explaining the variances in tax management. This study provides initial empirical evidence on the contribution of management accounting systems to tax management. It also enhances our understanding of which aspect of the contribution of management accounting system contributes more to tax management using evidence from an emerging economy setting. Manufacturing firms should ensure the adoption of robust information systems that provide information for tax decision making, specifically, information systems that can gather and process information from internal and external sources to analyze tax implications of all budgeted expenditures. Also, regulatory bodies like the Uganda Revenue Authority could encourage manufacturing firms to have sophisticated management accounting systems that can provide quality, reliable, and timely information relating to tax matters to improve tax compliance. However, the generalization of results is limited as the study only focused on Uganda’s manufacturing firms. Therefore, further studies could be carried out in other contexts.