Takele FufaYeshi Feyisa2026-03-052026-03-052026-06-02https://etd.aau.edu.et/handle/123456789/7838This thesis research investigates the impact of Value Added Tax (VAT) implementation on the operational efficiency of Non-Governmental Organizations (NGOs) operating in Addis Ababa,Ethiopia. Utilizing a mixed-methods research design, the study analyzed primary data from a survey of 112 registered NGOs, representing a 100% response rate. The relationship between VAT-related variables and organizational performance was evaluated using a multiple linear regression model, which demonstrated that independent variables including compliance burden,refund timelines, and budget availability explain 62.4% of the variance in NGO operational efficiency. The empirical findings reveal that the current VAT framework creates a significant structural drain on the non-profit sector. Quantitatively, 81.3% of the surveyed NGOs perceive VAT as a moderate to very strong constraint on their operations. A critical factor in this inefficiency is the systemic delay in the tax recovery process; 80.4% of respondents reported waiting more than seven months for VAT refunds, with 37.5% of the sample experiencing delays exceeding one year. These protracted timelines result in severe liquidity constraints, forcing 73% of organizations to resort to emergency borrowing and causing project execution delays for 78% of the NGOs.Furthermore, the study identifies a direct erosion of developmental resources, with 72% of NGOs reporting a reduction in program scope or beneficiary reach due to unrecoverable VAT costs. The administrative compliance burden is equally taxing, as 68% of organizations dedicate 15 to 30 staff hours monthly exclusively to VAT-related ocumentation and follow-up.The research concludes that the current system undermines the principle of tax neutrality for the non-profit sector. To mitigate these challenges, the study recommends that the Ministry of Revenues (MoR) prioritize the automation of refund mechanisms and streamline exemption procedures to ensure that donor-funded resources are maximized for social impact.Keywords: NGO, VAT Refund, Timeline, Budget, Compliance burden, Program and Administrative CostsenThesis