Vat (Value Added Tax)
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Transcript of 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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