1. Assignment onVAT IN PERSPECTIVE ON BANGLADESH

2. Prepared By Tahmina Tasmi TurinID No. : 1683 Registration No.: WUB 01/11/31/1683 Department of Business Administration World University of Bangladesh 3. Prepared For Helaluddin Ahmed Lecturer Department of Business Administration World University of Bangladesh 4. History of VAT Friedrich von Siemens, who proposed it in 1918 as a substitute for German turnover tax. For its regeneration, the tax owes much to Maurice Faure andCarl Sumner Shoup. In 1954, the value added tax system was initiated by the then joint director of the tax authority of France, Maurice Laure. 5. VAT in Bangladesh In April 1979, the Taxation Enquiry Commission (TEC) officially took up the issue of introducing VAT in Bangladesh as an alternate to sales tax. Until 1982, sales tax was being collected under the Sales Tax Act 1951, which was replaced by the Sales Tax Ordinance 1982 with effect from 1 July 1982. 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. 6. What is VAT? Value added Tax a tax on which the value of an article has been increase stage of its production. -The Oxford Dictionary 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. 7. Types of VAT Value Added Tax (VAT)Turnover Tax (Under section 8 & 4 of the VAT Act)Value Added Tax (turnover minimum 60 lacs,percentage is 15%)Supplementary Duty (10-500 percent under section 7 of the VAT Act) 8. Value Added Tax Features in Bangladesh General tax Charge as percentage Compusary for buyers and sellers Zero rated for export Exempted for cottage & agrobased industries Paying system Easy and transparent 9. Advantage & Disadvantages of VAT Advantages of VAT Encourages personal savings & investment Revenue Potential Act as supplementary tax Cross audit feature Less Litigation Easier Minimum ExemptionsDisadvantages of VAT Revenue is lower than expected Increase inflation Refund of Tax Increase in Investment Not Credit for Tax paid on Interstate 10. Reasons Behind Introducing VAT in Bangladesh Greater simplicity,transperancy Increase competitiveness of industries Increase revenue Encourage better administered tax system To avoid the problem of under valuing To help in fiscal consolidation. 11. VAT Mechanism VAT MechanismThe value added : how to measure it Three Alternatives in VAT ComputationThree Types of VAT BAseVAT Calculation Procedure 12. VAT Authorities VAT Authority AdministrativeJudicialNational Broad of RevenueAppellate TribunalCommissioner, VAT Commissioner,(Large Taxpayer Unit), VAT DG (Central Intelligence Cell) DG (Duty Exemption & Drawback Office), VAT Additional DG/ Commissioner, VATJoint Commissioner Director, VAT Deputy Commissioner/Director, VAT Assistant Commissioner/Director, VAT Superintendent, VAT Inspector, VATCommissioner (Appeal), VAT 13. VAT Collection Trends In FY2005, VAT revenues constituted 36% of the total tax revenue and 27% of the total revenue collection, making it to be the largest piece of the tax revenue pie. VAT collection is growing very rapidly over the last decade. In FY 2005 VAT achieved an impressive 23.7% growth.FY200 1FY200 2FY200 3FY200 4FY200 5VAT Collection61.3269.680.7185.75106.05Growth in VAT Collection13.613.516.06.223.7VAT collection as percentile of total revenue25.425.225.924.227.1Total revenue receipt241.7276.7311.19354392 14. Conclusion The Bangladeshi 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. However, some of the states are still attempting to push forward the deadline as this will allow all states to effect the transition to VAT at the same time. This will also provide some more time to the central government to amend central sales tax act.