This research tries to assess the Value Added Tax administration and revenue generation in thernbranch office of Sululta. In order to attain the stated objective, after the taxpayers are stratified,rn75 taxpayers and 43 tax officers were randomly selected using systematic random sampling.rnQuestionnaire was administered to collect primary data from these respondents. In addition,rnsecondary data was used and analyzed, mainly to show the trend of the last five years. Thernresults show that there are both opportunities and challenges of the Value Added Taxrnadministration of the branch office. Changing the attitude of the taxpayers and building thernimplementation capacity of the officers of the branch office are important recommendationsrnemerging from this study. The study results also indicate that there is a need for the enhancementrnof compliance. The government needs to reduce compliance costs of taxpayers and the taxpayersrnhave to improve voluntary compliance which will reduce operating cost of the government. Inrnaddition this study has examined Value Added Tax effect on revenue generation in Sululta town.rnLocal Governments receive statutory allocation from both the federal and state governments.rnThey also generate internal revenues through taxes and fees, etc. It is opined that expenditurernassignment should match with revenue generating powers in order for local governments torndischarge their functions effectively. In essence, revenue and expenditure decentralization mustrnsupport local government public revenue profile. Local governments should strive towardsrnimproving internally generated revenue and instill transparency and accountability in theirrnmanagement structure. This can be effectively carried out through community participation inrntheir various activities. The study results also suggest that further research is needed on thernissue