DISPUTE RESOLUTION MECHANISMS, TRUST AND VALUE ADDED TAX COMPLIANCE AMONG TAX AGENTS IN NAIROBI COUNTY, KENYA
Abstract
The main purpose of the study was to determine the moderating effect of trust on the relationship between tax dispute resolution mechanisms and tax compliance among tax agents in Nairobi County, Kenya. The study was anchored on the Theory of Optimal Taxation, theory of conflict of management, unified theory of acceptance and use, and the social interest theory. The study adopted 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. A hierarchical regression model was used to test the hypotheses. Findings showed that negotiation, internal reviews and alternative dispute resolution had significant positive effect on VAT compliance. Further, results showed a significant moderating role of trust on the relationship between the three dispute resolution mechanisms and VAT compliance. Thus, the study concluded that negotiation, internal reviews and alternative dispute resolution are key tax dispute resolution mechanisms that improve VAT tax compliance. The study recommends that tax collection institutions like KRA implement comprehensive training to enhance tax agents' negotiation skills and allocate resources for continuous professional development. It is also crucial to establish robust internal review procedures for thorough VAT compliance assessments. Strengthening alternative dispute resolution mechanisms with clear guidelines and expanding mediation and arbitration services is essential, ensuring tax agents are well-informed. Future research should explore the regulatory framework's impact on VAT compliance to improve tax administration further.
Keywords: Trust, VAT, Compliance, Negotiation, Internal Reviews, Alternative Dispute Resolution, Tax, Dispute Resolution Mechanisms
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