Tax contributions are crucial for public services like security, health, and education. The study focused on Value Added Tax (VAT) challenges in South Gondar Zone, Ethiopia. Data from 384 taxpayers and 102 tax officers revealed low taxpayer awareness of VAT. Main challenges include lack of awareness, improper use of tax invoices, weak taxpayer culture, and inadequate monitoring. Solutions proposed include tax education campaigns, door-to-door inspections, and employee training to improve VAT administration.