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The government uses different instruments to stimulate economic growth, reduce unemployment, and boost up investment, for which purpose, this system since its very beginning has gone through a number of filters of changes and improvements. Any change at the level of these instruments has a direct impact on the overall economic flow. The main purpose of this research is to analyze the role and importance of Value Added Tax (VAT) and its impact on budget revenues. It will assess the relationship between VAT and the generation of tax revenues in Kosovo, the creation of new fiscal reforms, especially related to the Value Added Tax. In more than 120 countries, VAT is the main source of the government’s revenues, which have an impact on around four billion people. This research was conducted by using secondary data which are a result of a review of the tax legislation of the Republic of Kosovo, the Ministry of Finance and various reports published over the years by the Tax Administration of Kosovo for the years 2009 2016. These data served to build up the hypotheses and to come up with the results. Econometric Model was also used – Precisely, in this paper work we have analyzed how VAT is the dominant factor in the tax revenues.

Value Added Tax as an important factor of tax revenues in the Republic of Kosovo