vat (value added tax)

WELCOME EVERYONE!

PRESENTATION OF TAXATION

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Today’s Speakers

•Sajid Kamal (1488)

•Fahim Hasanul Islam (1503)

• Isteak Ahmed (1478)

•Faisal Bin Didar (1489)

•Robiul islam (1509)

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VALUE ADDED

TAX

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Fahim Hasanul Islam1503

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Friedrich von Siemens, who proposed it in

1918 as a substitute for

German turnover tax.

For its regeneration, In 1954, the value

added tax system was

initiated by the joint director of

the tax authority of

France, Maurice Laure.

HISTORY OF VAT

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In April 1979, the Taxation Enquiry

Commission (TEC) officially took up

the issue of introducing VAT in Bangladesh as an alternate to sales

tax.

Final version of the Value Added Tax

Act was promulgated 31 May 1991 as a

Presidential Ordinance with

eight sections. It was made

effective from 2 June 1991.

VAT IN BANGLADESH

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What is VAT

Value Added Tax, popularly known as ‘VAT’, is a special type of indirect

tax in which a sum of money is levied at a particular stage in the

sale of a product or service.

Value Added Tax a tax on which the value of an article has been

increase stage of its production. -The Oxford Dictionary

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Characteristics of VAT

Vat is a general tax that applies

on goods and

services both.

It is a consumptio

n tax because it is borne

ultimate by the final

consumer

It is transparent and easier

the actual tax burden is visible at each stage

in the production

and distribution

chain.

VAT is applicable

to all domestic products

and services

with some exemptions

Export is exempt

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Isteak Ahmed1478

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Types of VAT

Value Added Tax

(turnover minimum 80 laks , percentage is

15%)

Turnover Tax

(Under section 8 & 4 of the VAT Act)

Supplementary Duty

(10-500 percent under section 7 of the

VAT Act)

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Advantages

Encourages personal saving &

investment

Income generator

for covering government

expense

Minimizing the tax evasion

Revenue potential

Cross credit feature

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Disadvantages

Revenues are lower than expected

criticized as the burden

Increase inflation

costly

Refund of Tax

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Scope

Value Added Tax Act, 1991

Value Added Tax Rules, 1991

Finance Act

SRO (Statutory Regulatory Orders)

Vat Case Law

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Faisal Bin Didar1489

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First, value added is equivalent to

the sum of wages to labor & profits

to owners of production

factors.

Second, value added is simply measured as the

difference between the value

of output & the cost of inputs.

THE VAT MECHANISM

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Three alternatives in VAT computation

The Addition Method

The Subtraction

Method

Tax credit method

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Three types of VAT base:

Consumption Method:

Allows businesses to immediately deduct the full

value of taxes paid on capital purchases.

Net Income Method:

Allows gradual deduction of Vat paid on capital

purchases over a number of years.

Gross National Product Method:

provides no allowance for taxes

paid on capital purchases

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Robiul Islam1509

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Exemption From VAT:• According to section 14 of Value Added Tax Act, 1991, the

provisions with regard to the exemption from value added tax are as follows:

• The Government:

The government can exempt importation or supply of any goods or rendering of any service from VAT or SD by notification in the official Gazette under this act.

• The Board:

The board can exempt importation or taking delivery of any goods and receiving of any services from VAT or SD by special order under this act.

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List of goods Exempted from VAT:

All goods listed in the second schedule of the Narcotics Control Act, 1990

• Methyl Alcohol

• Rectified Spirit

• Foreign liquor produced in Bangladesh etc.

Goods listed against some specific Headings in the First Schedule of the Customs Act, 1969 under HS Code

• Live animal

• Natural Honey

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Services Exempted from VAT:

Basic services essential to life

Social Welfare Services

Culture Oriented Services

Finance and Finance related Services

Transport Services

Personal Services

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Sajid Kamal1488

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VAT Authority

Administrative Judicial

National Broad of Revenue

Appellate Tribunal

Commissioner, VATCommissioner,(Large Taxpayer Unit), DG (Central Intelligence Cell)DG (Duty Exemption & Drawback Office), VATAdditional DG/ Commissioner, VAT

Commissioner (Appeal), VAT

Joint Commissioner Director, VATDeputy Commissioner/Director, VATAssistant Commissioner/Director, VATSuperintendent, VATInspector, VAT

Some important features of VAT in Bangladesh

A single stage VAT is applicable for both imports cum manufacturing.

A uniform rate of 15% is applicable.

VAT is compulsory for whole sellers/retailers.

Exports are zero rated.

VAT is payable at the time of supply of goods & services.Turnover tax @3% is leviable where turnover amount is less than tk. 80

lacLuxurious and socially undesirabl goods are subject to supplementary

dutiesVAT is applicable for forty six listed services

Some industries like Agro-based, cottage industries are exempted from VAT

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FY2008-09 FY2009-10 FY2010-11 FY2011-12 FY2012-13

Total Revenue

69180 79484 95188 114885 139670

Total Tax Revenue

55526 63956 79052 96285 116824

Value Added Tax

20116 22795 28274 34304 40466

% of VAT to Tax revenue

36.23 35.64 35.77 35.63 34.64

VAT Collection Trends in Bangladesh

All amount shows in crore

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In Bangladesh, VAT has been in force now for

nearly 18 years. After a slow start, the number of registered taxpayers

has significantly increased and the VAT

has become a significant contributor to

government revenue.

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