Chapter 22
Value Added Tax and Supplements Duty
(22.01-22.10)
Group Members
Serial No.
Name
ID
1
Sabiha Tabassum
B190203017
2
Md Sohel Hossain
B190203033
3
Maisha Fahmida Ria
B190203040
4
Md. Naeem Ul Fahim
B190203061
5
Md. Abdul Aziz
B190203064
6
Afia Fariha
B190203065
7
8
Farjana Akter Eti
Hafiza Akther
B190203075
B190203084
9
Afia Saiara
B190203086
10
Hamim Ibne Bashar
B190203090
Introduction
VAT
Tax instrument of taxing
Valuetool inAdded Principle
Effective and efficient
resource mobilizing
government consumption
History of VAT
1918
F von siemens
proposed VAT as a
substitute for the
newly established
German turnover tax
1954
France was the first
country to begin using
VAT to partially
replace its turnover
tax system
1967
The Council of EEC
issued directives for
widespread adoption
of VAT and link EEC
members with a
common tax system
Definition and characteristics of VAT
VAT is a simplified and transparent system of tax in which tax is levied on the Value
additions, at each stage in the production-distribution with provision of set-off of tax
paid on earlier stage.
It differs from a sales tax because a sales tax is levied on the total value of the
exchange.
 This general tax applies on goods and services both
 Collected at every point of sale and the tax already paid by the dealer at the time of
purchase of goods will be deducted from the amount of tax paid at the next sale.
 It is an consumption tax
 It is charged as a percentage of price
 VAT is an indirect tax
 It is transparent and easier
Advantages
Encourages personal savings and
investment
Has more revenue potential and other
indirect taxes
Acts as a supplementary tax
offers all the economic advantages of a
tax that includes the entire retail price
within its scope
Widening of the tax base by bringing all
transactions into the tax net
Cross-audit feature
Applied to specific goods or business
entities as a control mechanism
Disadvantages
Criticized as the burden of it relies on
personal end-consumers of products.
Revenues from it are lower cause of
difficulty and costlier to administer and
collect
Revenues from it are lower cause of
difficulty and costlier to administer and
collect
Places a heavy direct impact of tax on
the labor-intensive firm compared to
capital intensive competitor.
VAT avoidance are found in cash
transactions dominating industries.
Rationales in introducing VAT in Bangladesh
1. Since VAT requires computerized records it provides for greater
simplicity, transparency, and authenticity in the current taxation system.
2. To increase the competitiveness of the Bangladeshi
industry by removing the cascading effect of the traditional
sale tax system.
3. To bring revenue neutrality in the long run under VAT
regime that brings a consistent improvement in the tax -GDP
ratio.
4. To avoid the problem of under-valuing, as all stages of
production and distribution are subject to a tax.
Contribution of VAT in Bangladesh
Scope of Bangladesh VAT law
 The value Added Tax and supplementary Duty Act , 2012:
139 sections, many sub Subsections, and 3 schedule
 The value Added Tax and supplementary Duty Rules, 2016:
119 rules under 18 chapter's to be followed
 Finance Act : Various applicable tax rates and
relevant VAT Act and Rules
 SRO : Considered in imposing VAT
 VAT Case Law: VAT act guide assessing officer and
assesses in similar relevant circumstances
Important Features of VAT in Bangladesh
Imposed at import stage,
production stage, trading stage
on rending service etc
Turnover tax @4% is leviable ; where
annual turnover amount is more than Tk
50 lac but less than Tk. 3 crore
Tax return are to be submitted on
monthly or quarterly or half yearly basis
as notified by the Government
VAT at 15 % rate will
enjoy rebate or
refund facility
Bangladesh VAT Law set the
Four - tier VAT rates
(15%,10%,7.5%, and 5%)
Luxurious and socially undesirable
goods different rates ranging from 10
per cent to 500 per cent
SPC 22.7
Sumon purchases 100 Wall Clocks (WC) @Tk.70 per unit and he
sold all these WC to Nikhil at Tk. 9,300 where he earns profit of
Tk.2,000. After adding value of Tk.30 per unit Nikhil sells these
WC in the market. If VAT is same on all these clocks, calculate
how much VAT Sumon has to pay and at what price Nikhil sells
these WC in the market.
how much VAT Sumon has to pay?
Sumon purchases 100 Wall Clocks (WC) @Tk.70 per unit and he sold all
these WC to Nikhil at Tk. 9,300 where he earns profit of Tk.2,000.
Price paid by Sumon
Profit earned
Total
Selling price (including VAT)
= Tk. (100*70)
= Tk. 2,000
= Tk. 9,000
= Tk. 9,300
Calculation of VAT (Sumon) = Selling Price – Cost – Profit
= 9,300 – 7,000 – 2,000
= 300 Tk.
VAT
= Tk. 300
= Tk. 7,000
At what price Nikhil sells these WC in the market.
Sumon sold all these WC to Nikhil at Tk. 9,300. After adding value of
Tk.30 per unit Nikhil sells these WC in the market.
Price paid by Nikhil
= Tk. 9,300
As VAT is same on all these clocks, 15% VAT will be charged on Nikhil. So, at first, we have to
calculate the total value added by Nikhil.
Total value added
= (30*100)
= 3,000 Tk.
Total VAT
= (3,000*15%)
= 450 Tk.
So, the price that Nikhil sales these WC in the market will be(Cost + Profit + VAT)
= (9,300 + 3000 + 450)
= 12,750 Tk.
VAT (%) = (300/2000) * 100
= 15%.
* 2000 is the profit earned by
sumon
Thank You