Abstract: 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.