Value Added Tax (VAT) has become a major tax instrument worldwide. In Ethiopia, it isrna new tax system introduced since Jan. 2003 and an essential component of the taxrnreform programs which are currently undertaken. The existing VAT systems do notrnprovide a simplified access to and clarification on information of the tax laws, tax payersrnlack awareness on tax rules and regulations. These problems have a great impact on thernpracticability of the regulations. This paper examines VAT administration in Ethiopia and identifies key problemsrnincluding lack of public awareness, efficiency, effectiveness, performance and gaps in thernadministration of VAT rebidding, fraud and invoice. It is worth clarifying the EthiopianrnVAT system and the rationales behind for the business owners through easy, effective andrnaccessible systems using the KBS technology In this research work, a KBS is design in support of VAT administration in order to solvernthe problems identified specially in the area of VAT refunding. Both tacit and explicitrnknowledge for the KBS is acquired through interviewing domain experts and documentrnanalysis. The knowledge is modeled in a hierarchical tree structure. The knowledgernrepresentation is done using a rule based system. For the prototype development Prolong reprogramming.~ language has been used. Thernperformance of the prototype system is evaluated by implementing continual as well asrnassumptive evaluation techniques on qualitative basis. The result is encouraging to designrna practical a KBS for VAT administration. The finding in terms of accuracy, efficiencyrnand effectiveness is discussed and birther research areas are recommended.