Effect of Alternative Dispute Resolution on VAT Compliance Among Tax Agents in Nairobi County, Kenya

Abstract

Purpose: Tax is a vital source of government revenue in almost all countries in the world as it ensures that the government can offer goods and services to the general public. Therefore, tax compliance is critical in all economies, which recognize the role played by revenue collected from tax in national development. The key aim of the current study was to establish the effect of alternative dispute resolution on value added tax compliance among tax agents in Nairobi County, Kenya. The study was anchored on the theory of conflict of management. Methodology: The study adopted an explanatory research design. The study targeted 321 agents in Nairobi County while the sample size was 178 respondents. In this study, 178 out of 134 distributed questionnaires were completed and returned correctly, achieving a 75% response rate. The study used primary data, which was collected through questionnaires. The data collected was analyzed using both descriptive and inferential statistics. A linear regression model was used to establish the strength of the relationship between independent and dependent study variables. Results: Alternative Dispute Resolution also exhibits a positive and significant correlation with VAT Compliance, with a coefficient of β =0.093 p<0.05. Conclusion: The study recommended that the KRA should enhance its alternative dispute resolution mechanisms by providing clear guidelines, increasing the availability of mediation and arbitration services, and ensuring that tax agents are well-informed about these options. Future research should examine the impact of the regulatory framework on VAT compliance.