Abstract:
This study was conducted with the title implementation practice of value added tax in Hosanna
town, which is found in SNNPR with the objective of the analyzing consistency of value added
tax practice with its rules, proclamation and to identify the major hindrance problems in its
implementation. To achieve all these the researcher used mixed, quantitative and qualitative
type of data, descriptive research design and sample from target population by using stratified
random sampling technique. After that the researcher used questionnaires, interviews for
sampled respondents and reviewing related documents to collect the intended data and
analyzed the obtained data by simple static model with frequency, Percentages and presented
on tables. In finding the main challenges those encountering in effective implementation of
VAT are: misunderstanding of the public in general and business community in particular
regarding the VAT implementation objectives, resistance from registrations for VAT by some
traders, administration inefficiency from tax office, non-issuance of receipt to customers by
registered business enterprises. On the basis of these findings, the researcher recommended
that the authority should train the taxpayers about the rules and regulations of VAT
continuously, recruiting new skilled employees and give training for the existing one, it should
also increase its follow-up and investigation to control noncompliance enterprises, as well as
effectively and efficiently performing the tasks of identification of VAT payers, controlling
collections, recognizing genuine taxpayers and local public should be sensitive for the revenue
of country as well as town by contributing their effort on effective implementation.
