Purpose: This paper examines the challenges facing the implementation of using Electronic Fiscal Device (EFD) in tax collection in Tanzania. Specific objectives were to identify the challenges facing the implementation of the use of EFD machines, to evaluate causes for the challenges facing the implementation of the use of electronic fiscal devices, to assess the difficulties faced by taxpayers in adapting the use of EFD machines. Methodology: The study adopted the survey research design and

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... sample size of 68 taxpayers (VAT registered and none registered, but both who use the EFD machines) was used. The study was carried out in Dodoma City Council. Data were gathered using interview method in which questionnaire tool was administered. Data collected were organized, coded, and analyzed using by (SPSS) version 20. Data were analyzed by using descriptive statistics through frequencies and percentages as well as multiple linear regression model was also used. Findings: The system to a great extent assisted in sealing loopholes of tax evasion in Tanzania. The system had also assisted in improvement on tax compliance. The study established that the Authority is still experiencing some resistance to change from both internal and external customers. Conclusion: Thus, through major findings of the study; it has been indicated that EFD system had a lot of challenges which hinder the implementation of using the machine though the system enhanced tax collection in business premises in Tanzania. Those challenges include regular break down of power and internet, fairness of tax estimated from tax payers, lack of education on the use of EFDs machines, maintenance of machines and under pricing of tax from traders. Recommendation: The study recommends that stakeholders need more awareness of the system and friendly environment of using EFD machines in which they suggest strongly strategies for improvements of the system.