Every government needs dependable and sustainable domestic revenue so as to run itsrnfunction. In North Gondar, where substantial proportion of government revenue has beenrncollected from tax. However, in practice, VAT revenue performance in North Gondarrnwas not geared with VAT theoretical feature. This is due to VAT administrationrnproblems particularly for key VAT administrative functions. Survey had been conductedrnto gather information about taxpayers and tax officialsâ€™ attitude towards VATrnadministration problems in case of ERCA in Gondar branch. Self-administered semi-rnstructured interviews and questionnaires were distributed for ten tax officials and fiftyrnVAT registered taxpayers respectively. Further, secondary data was collected to measurernthe VAT revenue performance of the authority. The study tries to investigate and analyzernVAT administration problems in case of ERCA in Gondar branch and it tries to assessrnVAT effectiveness in generating more government revenue (VAT revenue performancernin the authority). For this study Surveying method through semi- structured questionnairernand semi- structure self administered questionnaire is used to investigate the researchrnquestions mentioned in chapter one. Besides, the study used percentages, mean andrnstandard deviation statistical tools to strengthen and to make the study more systematic.rnIn general, to analyze the data, statistical package for social science (SPSS) soft warernversion 16 was employed. The result part presents response rate for tax official andrntaxpayers survey, VAT administration tasks on key administration function, strength ofrnVAT administration, VAT rate and market competition. Finally, this section presentedrnVAT revenue performance of the authority and identifies VAT administration problems.rnVAT is the major source of government revenue in most developing countries. Thus,rnVAT has a significant role in the revenue system of government of Ethiopia. To sustainrnits role for the generation of revenue, it is important to ensure that the revenue generatedrnby VAT system should be efficient as possible. In the survey opinions were forwarded byrnthe respondents. For instance, strengthening administration capacity by skilled manpowerrnand the required materials to encourage honest traders by rewarding them and givingrnincentives and taxpayers should obey for the rules and should also cooperate with thernauthoritiesâ€™ operational activities