Value Added Tax collection Challenges in Ethiopia

As most of the developing countries do, Ethiopia was highly dependent on external financial resources to finance its development activities. For many decades, the tax contribution to GDP was very less and this needs an improvement. The government needs dependable and sustainable domestic revenue so as to run its function. In Gondar city, the substantial proportion of government revenue has been collected from tax. However, in practice, VAT revenue performance in Gondar city was not geared with VAT theoretical feature. Then in order to generate appropriate VAT revenue, it is necessary to avoid VAT collection constraints. Therefore, this research paper has focused on addressing issues relating to assessments of VAT collection problems in Gondar city administration revenue office. In order to attain the stated objective, the study is raised major research questions related to existing challenges for low VAT collection performance, the compliance level of VAT payer¿s, the taxpayer¿s awareness level about VAT rules and regulations.