A Dissertation submitted to Mzumbe University, Dar es Salaam Business School for Partial Fulfillment of the Requirements for the Award of the Degree of Master of Business Administration (MBA) Corporate Management.The rapidly increasing human population, medium businesses and the improvement of the trading grounds are contributing to an increase in country’s revenue. The increasing number of medium businesses and the consequent increase of source of revenue indicate a need to strengthen the government’s efforts in collecting tax. VAT is a consumption tax charged on VAT registered traders for goods and services at a standard rate of 18%. The purpose of this study is to investigate the effectiveness of VAT at Kibaha District. The research was both exploratory and explanatory. The population of this study included TRA officials, medium business owners and customers in those businesses in Kibaha district. The sample constituted the head of VAT Department and five other TRA officials, forty medium size business owners and fifty customers in these enterprises. The results of this study have shown that the amount of revenue collected by TRA is less than the projected, the people involved in VAT collection, starting with customers, business owners and TRA officials are not working as a team in helping the government to collect VAT. Some of the existing VAT collection methods and techniques seem to be inadequate, weak or outdated and the authority dealing with tax collection is ineffective.