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Assignment On Impact of VAT on the economic growth in Bangladesh
Course Title: Public Finance Course No: 306

Submitted To: Haider Arif Banking Chittagong Submitted By: Banking

Tanvir Mohammad Assistant Professor Dept of Finance and University of “Group-J” Dept of Finance &

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Chittagong

3rd year (mid term) University of

Submission Date: 21/04/2012

Letter of submission: Date: April 21, 2012 To, Tanvir Mohammad Haider Arif Assistant Professor Dept of Finance and Banking University of Chittagong Subject: submission report on impact of VAT on economic growth in BD. Dear Sir, With immense pleasure we would like to submit our report on “impact of VAT on economic growth in Bangladesh.” This program assigned us which we have enjoyed fully. We have prepared this report highlighting impact of VAT on economic growth in BD. Though we have tried all of our best to analyze different aspects of economic growth in Bangladesh. We wish to thanks for your kind co- ordination to make this report if there in any deviation & mistake in the report.

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Thanking you. Sincerely yours, “Group-J” Dept of Finance & Banking 3rd year (mid term) University of Chittagong
Acknowledgement: We have the immense pleasure and satisfaction in presenting this report on” impact of VAT on economic growth in Bangladesh “which is termination of our B.B.A program especially in public finance course. First of all, we would like to express our heartiest gratitude to our honorable teacher and course supervisor on public finance Tanvir Mohammad Haider Arif, Assistant Professor, Dept of Finance and Banking, University of Chittagong. We would also like to give thanks to our honorable teacher and course instructor of ‘income tax’ Mrs. Suraiya Nazneen, Associate Professor, Dept of Finance and Banking, University of Chittagong for giving her important advice about it. We were enriched by their kind encouragement and co-operation. We could not complete this report successfully without their responsible guidance, instruction, persuasion and advice. We would like to extend our heartfelt thanks to the contributors of generous help we have received from many sources of NBR office in Chittagong.

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Finally, we thanks our honorable teacher Tanvir Mohammad Haider Arif & friends for their cordial co operation, who have helped & contributed in preparing the report effectively. ……………………………………. “Group-J” Dept of Finance & Banking 3rd year (mid term) University of Chittagong

Executive summary:
Our report topic “Impact of VAT on the economic growth in Bangladesh” has been prepared under the guidance of Tanvir Mohammad Haider Arif, Assistant Professor, Dept of Finance and Banking, University of Chittagong. Thought it is difficult to conclude this topic under the short range, we have tried at our level best to present it better. On the whole report we have classified into three chapters. In first chapter, we try to highlight the basic information about VAT, it’s history, definition, reasons for introducing VAT in Bangladesh, argument for and against VAT, important features, goods and services subject to VAT in BD.etc.

The methodologies that have been followed in the study stated below: . Methodology of the study: In the mission the concepts and definitions have been taken by consulting with our honorable teacher tanvir mohammad haider arif and course instructor of ‘income tax’ Mrs. Information was collected from primary and secondary sources. business organization. we try to highlight data & information about impact of VAT on the economic growth in Bangladesh. subsidy. saving and investment.5 In second chapter. Dept of Finance and Banking . annual reports and websites. Finally we want to say that this report will provide some suggestion for which we have given our efforts to making it best one. which are very much needed for our public finance students. Associate Professor . decision regarding VAT in budget 2011-12 in Bangladesh. import & export. University of Chittagong and from different books. government employment and soon. Suraiya Nazneen. we focused on impact of VAT on economic growth in different sector in Bangladesh such as government revenue. At last chapter.

VAT. and development of Bangladesh etc. bureau of statistics. To achieve the main objectives. Secondary sources: a) Using various libraries b) Used different kinds of books on income tax. Data collection: Both primary and secondary sources have been used for collecting data. Objective of the study: The main and foremost objective of the study is to be with the economic growth of Bangladesh through VAT application followed by the Bangladesh government. Our friend’s advice was followed in this regard. these are: Primary sources: a) Group discussion b) Interview of different officials c)Advices of our senior brothers in our department. • Evaluating the impact of VAT in different sector in Bangladesh: . c)Website of NBR. • Analyzing data and information about impact of VAT on economic growth in Bangladesh. and so on. economics.6 Data selection: At first required data for the study was identified. statistics. the present study covers the following specific objectives.

→ Decision in budget 2011-12. These are as follows: I. Lack of financial support. Limitation of the study: The present study is a part of academic curriculum.7 → Impact of govt. some of the limitations are unavoidable. we could not collect enough necessary data about the study to prepare the report. Observable the study is far from being perfect. There was the shortage of adequate literature of NBR. Lack of experience of our group member because it is the first time for us to make such kind of report. → Impact on education sector → Tax revenue of Bangladesh. • Problems and perspectives. revenue → General consumer → Government employment → Import & export → Saving & investment of Bangladesh. III. so as to arouse high satisfaction to our respectable teacher as his expectation. Group Information: . IV. II. In face of our sincerest attempt in preparing a perfect report. Despite of numerous problems with limitation & bottlenecks. we tried our best to make the report more informative with recent data. Due to short term.

c 0 om Misbah-ul-karim Chy Roakon Md. Name N 1 2 3 4 5 6 7 8 9 Ahasan Ullah(Group leader) Md.1 Introduction……………………… 1.com mrmunnactg@gmail.cu@gmail. Sha Alam Raju Md.Mozammel Hossen Abu Mohiuddin ID E-Mail 0930309 Ahasan99_cu@yahoo.com 9 0930310 Mmhb_cufb_17@yahoo.com 7 0930310 8 0930309 4 0930309 2 0930304 8 Monaweruddin@gmail. Page No 10 10 11 11 12 .com kya@gmail.com 4 0930307 Mohid_univctg@yahoo.3 Definition………………………… 1. Monawer Uddin Kyakhin Rakhain Kyathowai Prue Marma 0930302 Roakon_univctg@yahoo.com 8 Md.4 Features…………………………… 1.2 History Background…………………………… 1.8 S.com 7 0930304 Rajucu100@yahoo.com kyawkhinbd@gmail.5 Arguments for & Against VAT ………….com 10 Mohammed Lokman Hossain Table of contents: Chapte r Chapter -1 Subject 1. Mostafizur Rahaman 0930304 Mostafizrahaman.

1.3.1—At Introduction time………….2---Current Years……………………… 3.. 3.5 appendices 15 15 17 17 18 18 18 19 21 25 25 25 26 26 Chapter -3 28 28 29 29 30 31 32 32 34 39 40 .1. 3.5.1..2 Exempted goods of VAT………………………. 3.3 Business Organization…………………….7 Covering service economies ……………….1 Government Revenue……………………………. 2.1.1.3.2 Saving and Investment………………… 3. 3.1.2 Decision on Import Duty………………… 3.4 Subsidy…………………………………….4.1.1. 3..8 Special scheme for tobacco & alcohol …………………… 3.3Tariff value for imposition of VAT……… 2. 2.6 Government Employment ……………………………….3.1 Tax base of VAT…….4 Conclusion 3. 3.1 Goods and services subject to VAT in BD… 2.1 Agriculture …………………………………… 3.2 Problems & Perspective of impact of VAT in Bangladesh……………………………………….. 2.1.1 Impact of VAT in different sector in Bangladesh…. 3.1.3 Data & Graph about impact of VAT in BD…………………………………………….5 Import & Export …………………………….5. 3..1Decision VAT……… 2.2 Public Health ……………………………...3 VAT rate and VAT assesse……….5 Decision regarding VAT in 2011-12 Budget in Bangladesh……………………… 2.9 Chapter -2 2.3.1. 3.9 Enhanced Audit …………… 3.4.2 Truncated base/fixed value addition……. 3. 2. 3. 3.4 Computation of VAT……………………………… 2.3.4..1.3 Power &Fuel …………………….

In general. and the retail sales tax was introduced in USA at sale level in Mississippi in 1932. it is usually considered as an indirect tax. The VAT was introduced in Bangladesh on 01 July. Netherland in 1969. The manufactures sales tax was introduced in Canada in 1923.1 Introduction: Value Added Tax (VAT) is imposed on value added by a manufacturer of a firm or distributors. capital.But since the financial year 1996-97. a turnover tax was first introduced in Spain in 1342. Govt. the firm adds value to these purchased materials by processing or handling them with the help of its own factors of production such as labour. buildings. chemical. etc. equipment.2 Historical Perspective of VAT: As an indirect tax VAT belongs to the group of sales tax which include turnover tax and sales tax at different levels of production and distribution. 1991 at its initial form is a sort of consumption tax. VAT is seen as the outcome of effort to refinement of multipoint sales tax. In such a case. In the production and distribution process a firm buys materials from other firms. it is a multi-stage consumption tax imposed on goods and/or services.wholesale or retail level(vide section 3 of the VAT Act. Denmark and Brazil in 1967. etc. of Bangladesh in 1976 formed a nine member taxation Enquired commission which in its report discussed different aspects of VAT .Now –a –days it is found in about 90 countries of the world including our neighboring countries India and Pakistan. which is collected at every stage of production and distribution rather than at the retail stage alone. auxiliary raw materials. furniture. 1. level. Since the VAT is mostly introduced as a consumption type. such increase in the value of outputs over inputs is the value added by the firm. A brief history of introducing VAT in Bangladesh now follows. Luxemburg in 1970.Belgium in 1971. value added tax is an alternative form of ‘sales tax’ and in its usual form. electricity and capital goods such as machinery. extending its coverage up to the level of import. “Value added” for a firm is nothing but its gross receipts from sales minus all expenditure on goods and services purchased from other firms. land. In such a situation VAT in its present multi stage form was first introduced in Japan in 1950 at a local govt. VAT in Bangladesh has been a broad-based consumption expenditure tax by covering the wholesale and retail levels. production or manufacture and service –rendering but not to expert (which is zero-rated ). There after it was introduced in France in 1954. These materials may include principal raw materials.1991). vehicles. the wholesale sales tax was introduced in Australia in 1930.10 1.etc. the oldest tax of this type.

In this connection let us refer to the definitions advanced by different authorities and authors. 1. But commission in this regard concluded that time has not yet come for its introduction.e. H. The VAT ordinance was promulgated on 31st may. after 30 days of the promulgation of the VAT ordinance). as a routine process of the parliament. 1991 was passed by the parliament as the 22nd Act of 1991 on 09 July. B this brought the concept in discussion latter on since 1979. 1991 which combined excise duty and sales tax to a large extent subsequently. Bhatia: VAT is a tax not on the total value of the goods being sold. 1991. chambers.11 including its advantages &limitations. Canadian Royal Commission on Taxation (CRCT): A tax on value added might best be described as a sophisticated turnover tax. etc.In1986. that gross value minus the value of inputs”. excluding direct imposed) B. The opposition protested the introduction of the VAT bill.4 What is VAT? Value added tax refers to the tax applied on value added as per prescribed rate. but only on the value added to it by the last seller. D.a World Bank mission visited Bangladesh and among others it recommended introduction of VAT. therefore. where the cumulative tax factor is removed by taxing each transaction only in respect of the addition to sales value which     . it is a multi-stage indirect tax imposed on the value added at different stages starting from production to distribution process. In fact. but on net value. The value added tax bill 1991 was introduced on the Jatiya Sangsad (National assembly/parliament) on 1st June.They recommended adaptation of VAT thereafter based on a series of discussion with relevant parties. The then finance minister in his statement of objects and reasons for bringing the VAT bill said that it was being considered proper and necessary to introduce VAT in place of present sales tax at the import level and exercise duty at the local production and service level in order to remove inconsistency and defects of the current indirect taxation system in the country. Stout: Value added tax is a multiple tax imposed at a flat rate upon the annual sales proceeds of a company less all its purchases from other business (I. The seller. Based on this recommendation a tax mission from Bangladesh visited many countries in 1989 and in 1990. the value added tax bill. K. is liable to pay a tax not on its gross value.e. However. 1991 (I. The oxford Dictionary of current English: Value added tax means a tax on the amount by which the value of an article has been increased at each stage of its production”.

thus stimulating.  Some goods and service have been exempted from VAT such as: a) Agricultural products of the country. But for certain sectors and goods and for annual turnover lower than Tk.  It is changed at rate of 15% on taxable goods. h) Cold storage:  for all export VAT is zero i. Taylor & Hozman listed the merits of VAT. c) Ball pen produces.6 Argument for & against VAT: Proponents of VAT give a number of arguments as to the merits of VAT. books binding enterprises.  Importers pay the VAT based on the prices of their imports.  It is used to stimulate exports. ……………************************……………. b) Utensils from aluminum and materials produced cotton and synthetics. factory and other related items do not exceed Tk. 1. sweet shop and decorators of upazilla level. 1.. ………………*********…………. For example evans. 15 lakh turnover tax and supplementary duties at some other rates instead of VAT is charged. the exporter gets a rebate for the tax paid. f) Leasing company engaged in renting factory of capital goods. it doesn’t have to wait until after the final sale. e) Small restaurant. whether manufactured .  The government gets its money earlier.12 has occurred in the stage immediately prior to the transaction in question. exempted  VAT assesses need to be registered as per provision of the act. savings and investment. The tax is paid on goods purchased. 3 lakh. d) Cottage industry where investment in machinery. g) Scientific instruments imported by educational institutions. Some of the important points are as follows:  It increases the cost of consumption.5 Some important features of VAT in Bangladesh: An analysis of VAT act and rules reveals the following features:  It has been framed by incorporating sales tax on imported goods and excise duty on domestic produced goods.e.

Thus imported goods are not given an advantage over locally manufactured products. . VAT has several disadvantages from the view of raising price.  It catches service companies.  An additional tax may reduce a country’s rate of capital formation. like sales taxes.  It may be administratively difficult to enforce. in such a context the demerits of VAT have been pointed out by various authors. its impact on the tax payer decreases as income increases and the portion of income spent in consumption decreases. complex recording. leading to a relatively tax may reduce a country’s rate of capital formation. and sales are an important source of local government revenues.. For example. which historically have been exempted from sales taxes. who are usually themselves administratively illequipped to comply with the tax. administrative difficulties resulting from number of collecting points.**************…………. leading t a relatively decreased competitiveness of the economy and a reduction in exports. Taylor. Evans.  It is unpopular with local governments. some of which are as follows:  It is a regressive tax.  It also difficult to administer in applying it to large numbers of small tax payers. practically when a large number of classes of tax payers are given exemption from tax. and Holzman pointed out a number of disadvantages. etc. …………….13 domestically or imported. A service company has to charge the tax to its customers in order to recover the tax paid on its purchase of supplies and equipment. since it competes with sales taxes as a consumption tax.

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All goods as specified in the first schedule of the excises and salt act. • All services provided in Bangladesh except those services mentioned in the second schedule of the VAT act[vide section 3(1) of the VAT act] Under section 3 of VAT following services come within the orbit of VAT : o Hotel and restaurant-big and medium ones situated in metropolitan city or district head quarters. ……………***************…………… 2. in case of manufacturing or production thereof in Bangladesh. studio and colour photo manufacturer. o Community center. o Motor garage workshop. o Decorators-situated in metropolitan city or district head quarters. o Godown serving on commercial basis. following goods are mentioned as exempted goods: I. o Mechanized laundry.16 2. VAT is imposed on the following goods and services: • All goods imported in Bangladesh except those mentioned in the first schedule of the VAT act.1 Goods and service subject to VAT in Bangladesh: According to section 3 of VAT act. • All goods supplied except those goods mentioned in the first schedule of the VAT act. o Indenting firm. o Auction firm. o Advertising firm. o Construction firm. Telex and Fax-serving on commercial basis. 1994(1 of 1994). . o Sweet shops-big and medium situated in metropolitan city or district head quarters etc. o Travel Agency.2 goods and services exempted from VAT: In the first schedule. o Cinema. o Video-cassette shops. o Printing firm except where tax exemption is given for printing educational materials and journals. o Telephone.

vegetables. → Fishing & allied agricultural work etc. living horse and animals.17 II. All goods as mentioned in the second schedule of the narcotics control act. 1990(Act no. There were 65 services listed in the second schedule for tax exemption till 1999-2000.  Malaria. etc. etc. besides under SRO 204/91/22 & different circulars issued from time to time following goods have been exempted. • Social welfare service: → Govt. • Cultural services: → Broad casting service(exempting video casting. TB. live animals and meats thereof. III.  Animal feed. provided medical assistance work → Govt. provided educational services → Pollution preventive works. by keeping similarity with the first schedule. etc.  Cloths made of cotton and synthetics. animals hides. fishes. the second schedule has been replaced by a new schedule in which the list of exempted services was included. fish dry fish. such as: natural honey. this in brief are as follows. horns of deer. child care & other social works. cancer preventive medicine. In the second schedule list of services exempted from VAT has been provided under 7 categories. packaging of agricultural products. But in the FY 2000-2001. → Rehabilitation.  Homoeopathic medicine. • Fundamental services for livelihood: → cultivation work of agricultural land → Irrigation in agricultural land → Works relevant to procurement.S.20 of 1990). .  Books and periodicals. audio recording.  Family planning items. advertising agency services etc) → Book publication(exempting printing & binding) → Basic artistic work. oil seeds. Code)*** The above goods are mainly ‘primary goods’ of the agricultural sector. etc. silk. meats of animals. in case of manufacturing or production thereof in Bangladesh.  Chemical fertilizer and pesticides. Goods under harmonized commodity description and coding system(H.

Tax returns are to be submitted on monthly or quarterly on half yearly basis as notified by the govt. → Researcher in different types of transports → Drivers of different types of transports → Designer(architects. manufacturing wholesale and retail level. Tax paid on inputs is creditable / adjustable against output tax. etc. media reporters. sportsmen. 35%.*************……………. 65%. • Activities relevant to money & finance service: → Receiving saving → Life insurance policy → Stock exchange → Discount card issue. electrician. 1991 existing statutory SD rate are as follows: On goods . etc.20%.18 → Cultural ceremonies (excepting community centre & professional oriented cultural activities). VAT is payable at the time of supply of goods and services. 15% VAT is applicable for all business and industrial unit with an annual turnover at TK. etc. 100%. Cottage industry (defined as a unit with an annual turnover at less than Tk.. • Transport service: → Passenger transfer (excepting air conditioned transport) → Goods transport(excepting shipping agent & courier service) → Air lines(excepting charted air & helicopter service) • Personal service: → Actors. 2. . 2 million and above. 2 million and with capital machinery valued up to Tk. A uniform rate of VAT rate at 15% is applicable for both goods and service.3 VAT rate and VAT assessee: VAT is imposed on goods and services at import stage. 350%. etc. interior designer )etc • Other services: → Religious activity → Postal service activity(except courier service) → Charitable services → Social welfare activities of local govt. Export is exempted.. plumbers. Supplementary duty (SD) is imposed at local and import stage under the VAT act.2 million. …………. 250%. 300000) is exempted from VAT. Turnover tax at 4% is leviable where annual turnover is less than Tk.

1 Tax base of VAT: Customs assessable value import stage+ customs duty + supplementary duty +domestic/local stage. autonomous. 2. provided that the wholesaler retailer do not avail the facility at inputs credit. NGO’s insurance companies limited are authorized by the govt. Excise duty: At present excise duty applies to only two items: bank deposits and domestic air ticket ( To. 2.. Example: Tariff value for mild-steel products produced from imported/locally procured re-rollable is Tk. 2. Such tax is also imposed collected at the import stage from importers at finished goods as an advance trade VAT.. 45%.3. and 9% VAT at the wholesale and retail stage. net VAT rate for different rate at value additions comes to 15%. 25% 30%.00 per MT normal VAT input credit is also not available under this system. In such a circumstance. bodies. 15%.19 On services: 10%. In case of wholesaler & retailer.2 Truncated base/fixed value addition: In some of the cases of goods and services producers and sellers face difficulties in avoiding VAT credit adjustment facilities due to non availability of invoices from the sellers of inputs. semi govt.3. In order to remove this operational difficulty fixed bases such as 10%. govt. on certain services.3. &35%.3Tariff value for imposition of VAT: Under the VAT law. Goods (manufacturing): product cost + profit and commission+ (supplementary duty) Service:[total receipts excluding VAT but including supplementary duty.3 Computation of VAT: . govt. is empowered to fix tariff value for some items for the collection of VAT. 2. 4000. 60% value addition is taken into account for calculation of VAT for a number of goods and services.25%. there is a special provision for a 15% VAT known as a trade VAT on the total sale. 250 per journey) 2. Deduction of VAT at source: As deduction at source is also practiced in case of VAT. to deduct applicable VAT on the service at source.

The important formulate for computation depending on situation are shown below: Computation of value added tax at different Computation Importer Producer stage (1) (2) (3) A Value of goods Tk. 90 Tk. 800* Tk. 45 Tk.5 Decisions regarding Indirect Tax in 2011-12 Budget in Bangladesh: . 1150 - *Import duty leviable value plus import duty plus supplementary duty. wholesale[colum n(4) and retail[column(5) B Gross VAT@15% Tk. 0 Tk. 45 payable[B-C] E Billing inclusive Tk. 600* imported[colum 300* n(2)] or produced[colum n(3). which is borne by the consumer] stages: Wholesale retailer r (4) (5) To. 1000* Tk. 150 Tk. 45 paid at paid at preceding stage] D Net VAT Tk. 90 C Tax credit[tax Tk. 30 Tk. 135 Tk. 45 Tk.0 Tk. * Inclusive of profit margin 2. 920 - Tk. 135 Tk. 15 Tk. 120 Tk. if any.20 There are different procedures of computing VAT depending on situation and methods. 690 of VAT[A+B] F Government revenue[row d shows VAT total taka 135.

autonomous bodies. Govt. he proposed to add new provisions to this Act to take up judicial proceedings in the court of special Judges appointed under the criminal law Amendment act 1958. has declared price procedure and introduced amendments in the law for payment of taxes using various means at the same time. This goods and services are shown in annex –B. In order to standardize VAT system on the basis of tariff value. After review of truncated base value in certain cases. our govt. limited companies and educational institutions. want to with draw truncated base value for some services.1 Decisions on VAT: Establishing Digital Bangladesh is a key priority of the present Govt. NGO. To augment collection of VAT from domestic sources. finance minister has proposed to introduce online VAT registration and return submission. . a proposal has been made to increase tariff value in some cases. Considering the demands of taxpayers. In order to impose penalty under the existing VAT Act.5. Govt. Reforms in VAT System: To modernize the VAT system. Specific software (Bangladesh VAT system eVAT) will be used for this purpose which will be developed by a private firm under the direct supervision of NBR.Currently there is no provision in the VAT Act for protection of information provided by the taxpayers. In order to digitize the taxation system.21 2. Besides they want to include some goods and services under VAT net. our honorable finance minister has inserted a new provision in a new provision in the existing law for protection of information given by the given. bank. the following measures: In order to broaden the scope for collection of VAT at source . it has been proposed to take necessary amendments in VAT act to impose VAT on e-commerce. proposed to include under it any purchase of goods or services through tender by government organizations semi-government organizations. insurance company or any other financial institutions.

Besides they also want to impose and enhance supplementary duty on few goods at the local manufacturing stage. small businesses were given the opportunity to pay VAT at low fixed rate remained unchanged till to date.22 Taking tobacco related health risk into account. The rates of minimum VAT. they proposed a ration enhancement of price-slab and supplementary duty of cigarettes. . In 2004.

exempt manufacturers of refrigerators. They have expanded annual turnover limit for turnover tax up to Tk.2Decision on Import Duty About 38 percent of Domestic Revenue Income Comes from Import Stages Although Bangladesh has. 1 Data Entry Operator and 2 Sepoys as part of restructuring manpower. two Custom bond Commission rates. excise duty is imposed on domestic airline ticket per seat for single journey at the rate of Tk. 2. To expand VAT net. govt.5. three Appellate Tribunal. one ICT commission rate. 300.60 lakh. has proposed to withdraw VAT from plastic and rubber made sandals up to the price limit of Tk. Excise and Value Added Tax) cadre. Imposition of supplementary Duty: At present. Newly created outfits (already approved by ministry of Establishment ) like two customs houses. Expanding the Coverage of Turnover Tax: At present.They imposed exercise duty on the deposit balance of any account of leasing and financing organization as shown in annex-B. customs revenue still contributes to about 38 percent of the total internal revenue collection in the country.23 Encouraging Heavy Industry: With a view to encouraging investors to build heavy industries. Simultaneously. continued to gradually reduce the rates of duty and taxes at the import stage as a member of the World Trade Organization. over the years. it has been renamed as BCS (Customs. Administrative Reforms: Since. motor cycles and energy saving bulbs along with its raw materials from VAT. we are taking steps to set up more VAT office and to create a small VAT office in each upazila consisting of 1 inspector. Finance minister has proposed to continue with the four-tier customs tariff structure. one VAT survey Directorate. Withdrawal of VAT: Govt. However. turnover tax facility is given to small and medium industries (SMEs) up to the limit of Tk. customs offices in 10 foreign missions. collection of VAT is administered by BCS Customs and Exercise cadres. fifty-six VAT Divisional Offices and one hundred and forty-six VAT Circle and restructured existing offices will start functioning from 1 July 2010. VAT on the services rendered by travel agencies. 40 lakh per year at the rate of 4 percent considering the role of SMEs in the industrialization of the country. freezers. paying close attention to the issues of .80 per pair.

pulse and edible oil. Cotton and Fertilizer With a view to keeping the prices within the reach of the general people. Therefore. Bangladesh now present before this august House the budget proposals relating to import duty for FY 2010-11. onion. and promoting domestic industries. the categories of commodities that attract concessionary duty benefits were kept outside its purview. Increased Revenue Income from Sugar Industry The specific rate of duty on raw sugar was withdrawn last year in response to the sudden price hike of sugar at the world market. due to a good crop this year. medicine and cotton. has proposed to enhance the supplementary duty rate on both completely built up (CBU) and completely knocked down (CKD) motor cycle from 20percent to 30 percent. Responding to the requests of the major trade bodies in the country. its world price has gone down. this proposes to impose 15 percent VAT on import of CBU/diesel/petrol/CNG buses having 40 seats or more. To encourage the growth of the local motor cycle industry. VAT authority proposes to reduce import duty from 12 percent to 5 percent and withdraw 5 percent regulatory duty on milk powder. However. fertilizer. 5 percent regulatory duty was imposed in the previous budget on all the products with the highest customs duty of 25 percent in order to protect local industries and also to ensure a consistent growth in revenue collection. Maintaining Zero Tariff for Major Food Items. Considering the sudden exorbitant increase in the world price of milk powder.24 facilitating trade. VAT propose to maintain the 0 percent customs duty rate on commodities like rice. wheat. Rendering Assistance to Domestic Transport Industry In order to provide support to the development of local industries. Medicine. to ensure higher revenue collection to meet government's . this proposes to continue that 5 percent regulatory duty for another one year. However. present govt. Protecting Domestic Industries Against the backdrop of the gradual reduction of trade taxes following WTO guidelines. supplying goods to consumers at a fair price. seeds.

Reasons for undertaking such measures and the nature of changes proposed have been illustrated in various tables in Annex C. withdrawal. govt.25 developmental needs. In this budget. Again. Again. Also propose to continue the flat rate-based depreciation system imposed in the last year’s budget and to reduce the consolidated rate of depreciation from 40 percent to 35 percent making it applicable only for cars of up to 4 years old. Restructuring the Tariff Rates for Discouraging the Import of Motor Vehicles Correction of the First Schedule of the Customs Act for Simplifying Customs Procedure Imported by the foreign airlines operating in Bangladesh for their own use govt. present for consideration of this House the proposals of reducing customs duty for energy saving four products in the power sector and three products in the energy sector (Table-2). Tariff Reduction Facilities for Some Items of Electricity and Power Sector VAT Proposal would like to propose to continue the benefits of duty-tax exemptions given earlier to encourage investment in power and energy sectors in the country. harmonization. measures have been proposed for simplification. 4. this propose to revise the rates of supplementary duty and reclassify motor cars and micro buses based on cylinder capacity (cc) [Annex C-1]. also proposes to simplify the baggage rules to facilitate clearance of the baggage of wage earners. reduction. In order to prevent misdeclaration in the . Considering persistent traffic jams causing innumerable sufferings to city dwellers. a proposal has been made to impose specific rate of duty on raw sugar and refined sugar at the rate of Tk. In order to discourage tobacco cultivation in agricultural land. 2.000 per metric ton respectively.000 and Tk. this propose to amend two licensing rules relating to freight & forwards and customs agents (both C&F and shipping). and enhancement of customs duty and supplementary duty on a number of products. Govt. this proposes to impose 10 percent export duty on un-manufactured tobacco. rationalization.

. govt. .(Table-1) Source: BUDGET SPEECH 2010-11 Ministry of Finance. …………………………………… ۞۞۞۞۞۞۞………………………………. has propose to promulgate a new SRO. The transshipment and transit activities are increasingly gaining importance in international trade. Ithis propose to make it mandatory for the submission of price certificate from the manufacturer or from the trading agent with at least 30 percent ownership of the manufacturer.26 customs valuation of new motor cars. Government of Bangladesh. In order to facilitate customs formalities of such goods in Bangladesh and to determine related transshipment or transit fee.

The revenue-GDP ratio in Bangladesh is one of the lowest (8. .1. equity and progressiveness all of which complement the establishment of good governance. VAT is widely applied in the European countries. VAT has been introduced not only because of its revenue raising potentials but also because of its simplicity. It has been found that VAT funds the Government expenditure more than any other tax. effectiveness and efficiency.27 3. VAT yielded revenue 5. The VAT was introduced in Bangladesh on 01 July.5%) in the world. starting from raw materials to final product. Of all the tax revenues. which is imposed on goods and services at each stage of production. now a number of countries across the globe have adopted this tax system. VAT is levied on the value additions at different stage of production. The major earnings of governments revenue is coming from value added tax (VAT). transparency. wholesale or retail level.1 Government Revenue: Value added tax (VAT) in Bangladesh now has very vast area of Government’s revenues collection.1 The impact of VAT in different sector of Bangladesh Value added tax or VAT is an indirect tax. So the Governments has given due importance to VAT and the fate is that the days to come shall have importance no less than others fields. In the very first year of its introduction. Starting from 3190 crore taka in FY 1991-92. However. extending its coverage up to the level of import. VAT at present is the single largest contribution to GDP. production or manufacture and service rendering but not to export (which is Zero-rated). 1991 at its initial form is a sort of consumption tax.43% more than the previous year. But since the financial year 1996-97 VAT in Bangladesh has been a broad-based consumption expenditure tax by covering the wholesale and retail levels 3.

For this purpose these organizations has procure the large portion of capital through borrowing money.3% of GDP while the total contribution of tax revenue to GDP is 8.2Impact of VAT in savings and Investment: Savings is one of the important components of capital formation. people are running towards the interest paying institutions such as banks. VAT now accounts for 4.657 crore taka in FY 2008-07. From these sources Bangladesh govt. for making saving in financial institution. NBFI etc. 3. if majority of income is used for consumption.3 Impact of VAT on Business Organizations : . The major two components of govt. 250% & 350% on goods and 10%. Such investment has tremendous impact on national income of Bangladesh. revenues. For high rate of VAT in different luxurious goods. 35%. amount of saving is bound to decrease.36%. 15% & 35% on services which contribute to the govt. RMG sector which is the life-blood export is highly depended on outer source which is made available by those lending organizations and corporate houses and conglomerates for increasing EPS use the method of financial leverage. Through establishment of such projects huge amount of investment are made around the country. Businessmen are being benefitted for being offered in different loan packages and export-oriented organizations which are out payment of VAT makes finance by taking loan from such organization. In this case. We cannot imagine formation any large and mid sized business without bank loan. Income of an individual can be normally divided into savings and consumption. If there are more savings.28 VAT yielded 28. 100%. it plays a key role in increasing expenditure of consumption. As VAT is a tax on consumption. insurances. 65%. People lose their intention to expend for the goods in which high rate of VAT is imposed. though Bangladesh being least developed country Banks have been going to door-to-door of borrowers. there will be more availability of capital for investment purpose.1.3) 3. depositors are paid interest at different rate in different compounds and most of the people prefer saving to unnecessary consumption. revenue are income tax and VAT. meets not only public expenditures but investment of public projects. Generally VAT are charged 20%. (Relevant table given Chapter 3. therefore.1. Moreover.

fuel etc. But as VAT is imposed on in different rates on in their products. demand may be affected when customers are affordable enough such as alcohol and cigarettes. declares subsidy huge amount of capital in every budget for agriculture. though the provisions for agricultural subsidies has undergone a decline but in view of the continuous increase in the fertilizers and other input prices in the international market. In the budget of FY2011-12. Board of Finance Ministry separate a substantial portion of fund from public revenue for the subsidy of agriculture. demand of these VAT imposed products varies.4 Subsidy: Subsidy is a benefit given by the government to groups or important sectors specially to decrease the production cost for producers and to provide services for marginalized people. Farmers demand fertilizer. Table1: Amount of Disbursed Agricultural Subsidy . these get increased significantly. 3. And those organizations which are 100% export-oriented are out VAT imposition recognized by law. domestic supply dependent firms get benefitted as they need not to pay any sorts of indirect tax like VAT for their supplies. the most prioritized sectors of the government are agriculture.29 It is matter of debate whether the VAT has any influence on the business organizations or on their profit.1. They need not to make any payment of VAT to administration.1 Agriculture: Govt. fuel & electricity and public health. there is high rate of VAT.4. seeds. 3. a significant increase in subsidies in the may soon be needed during the year.1% higher than the allocation made in the previous year’s budget. As VAT is imposed on their goods or services produced. As VAT is imposed on few products in higher rates. In the context of Bangladesh. Depending on types of products and consumers of those products.1. in low price though price of these materials is increasing as they can produce crops in low cost and can make profit. as some business firms have to pay import duty in case of importing raw materials and machineries such import of all kinds of fabrics and RMG articles have to pay 45% import duty(increased by20%). But in case of other few products which are consumed by higher and higher-middle class holder are not influenced not much. the amount of agricultural subsidy in the FY11 was 11. Besides.

) 125 195 365 500 1127 1400 2178 5500 4750 3945 .30 Fiscal Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Subsidy (in crore Tk.

3. There are ……. To bear this big burden govt. Not only business organizations but also day-to-day normal life has been dependent on these two materials.4. So that it is difficult by consumer to expend for the purpose of . Such impact plays a role in the balance of payment positively. In case fuel also.Medical College Hospitals and thousands satellite clinics where govt. These subsidies for the mentioned sectors are being funded from govt. needs allocate a large amount of fund as subsidy in public health sector also. govt. production and agriculture.1. The Board of Agricultural Ministry request for budgetary resources of Tk. provides all sorts of treatment services. revenue. primary medicines and even catering services for serious patients with very low fees. huge amount of subsidy is being distributed. 3.1.2 Public Health: Besides agriculture. Our govt. 750 Crores for diesel subsidy appears to be a right decision.31 3. is imposing VAT at different rates in case of importing goods which are not necessary and urgent goods. utilizes VAT. there is subsidy from govt.3 Power &Fuel: Power and fuel have been important part of civilized life. needs to use natural gas and most discussed one is Quick Rental System which is based on diesel oil.1.5 Impact of VAT on Import and Export: It is really an indirect and explainable impact of VAT. As area of VAT is increasing govt. For ensuring electricity govt. As general people can’t afford to bear these expenses to be availed. has been able to declare in large amount. for decreasing cost transport. And VAT is playing indirect role to booster these sectors.4.

bodies with the progress and broadening. importers also face in making the availability of capital for importing luxurious products in large quantity.1. 3. wheat. which historically have been exempted from sales tax. the more foreign currency come inside. 3.1. The bigger the organization’s operations. there have been various types of employment in different designation for the collection. edible oil and other common foods. importers will contribute to the certainty of food security as no duty is imposed on import of rice. entrepreneurs are encouraged to invest in export-oriented business. govt. With the expansion of Bangladesh economy. Beside this. importers will lose their intention to open LC (Letter of Credit). Moreover. increased the salaries of all govt.6 Impact of VAT on Govt. After the introduction of VAT. Specially growing middle is contributing to such expansion. A service company has to charge the tax to its customers in order to recover the tax paid on its purchase of supplies and equipment.58%) in the FY2007-08.The more they try to capitalize their savings for investing in the export-oriented projects.32 buying these luxurious goods. to make the payment of salaries for employees of most unproductive govt. VAT has a big contribution on the increment of VAT. there were 5328 persons employed in the area of indirect tax administration encompassing custom duty. offered zero rate VAT for the huge of contribution of that sectors in the increment of exports though there export duty of 5% in case of tobacco. Govt. imposed sales tax only on manufacturing sectors before the introduction of . 100 collected of VAT costs only 0. Employment: VAT has good impact on employment especially on govt. service sector is enlarging dayby-day. calculation and execution of VAT. Moreover. Beyond govt. But Bangladesh is experiencing the growth of FDI (foreign direct investment) in few specific sectors in recent years as govt. In the few last years. As most of these bodies are unproductive VAT through contribution to public revenue has a mentionable impact in the payment of salaries. the more the jobs are being created on VAT execution and administration. If demand decreases. VAT and turnover tax. Though administration cost is too low as per Tk. bodies Ministry of Finance needs to relay on public revenue. employment.58(. In this way foreign reserve has been stronger for few previous years though is now facing problem.7 Covering Service Economies: t catches service companies. Besides. there have been thousands of recruitments in govt. there are increasing VAT related jobs. organizations. In 2005-06. business organizations also appoint auditors and accountants to operate auditing and computation of VAT. As exporters are exempted from the payment of VAT. As the area of VAT is widening. They are paid for their exported goods in terms of dollar ($) which is considered as the standard of payment. posts substantially.

it is one of the big sources of VAT. 3. VAT is being imposed on the service firm. is earning a huge amount of VAT from these mobile service operators. Another mentionable sector in economy under the imposition of VAT is real estate and land development firms. or other container in which the goods are supplied a stamp. 104 and the rate of the supplementary is 58%. preservation. Note1: this means that the amount of supplementary duty paid by the manufacturers is not linked to the price at which it makes its supplies. or special sign or marks For VAT purpose the of any supply to which a special scheme under the section relates shall not be less than the maximum retail price. Aircraft business has also been brought under the purview of VAT. pot. which shall be the dutiable value for the goods.33 VAT. govt. Besides. is imposing VAT on services provided to their consumers. 60. tobacco. irrespective . After the advancement of telecom sector. or special sign or mark of a particular size and design. Dhaka. Some new emerging service industries such as beautician service. distribution. community center advertising firms etc. observation. manifesting measures of security and for that purpose the board may determine all producers relating to the scheme. with the development of travel and tourism and expansion of international business. or similar products. there have been many hotels and motels around the heritage and beautiful places like Cox-sbazaar. in relation to the use. banderol. Example 1: the MRP for the particular cigarettes is Tk. accounting and packaging of stamps. have been imposed VAT on their offered service products. this service industry is providing huge amount of indirect tax. Any special scheme imposed under this section shall set a maximum retail price for the goods. ingredients for alcohol beverages or similar products. VAT collections is being in huge amount. supervision. As migrating workers and travelers are increasing rapidly. As the transactions in this industry are in larger amount of payment.8 Special Scheme for Tobacco and Alcohol: The board may impose any special scheme for the payment of supplementary duty on supply of dutiable goods manufactured in Bangladesh if the goods are:Cigarettes. Chittagong. including blended products.32 Any special scheme by the board under this provisions requiring the manufacturer to affix on or to the body of the package.1. As they are offering different types in their product line. banderols. Note2: the VAT treatment of supplies of tobacco and alcohol will not be affected by the scheme. The amount of supplementary duty paid by the manufacturer will be Tk. Govt. or Alcohol beverages. bottle. event management. and Shundorbans etc.

65 respectively. Of 334firms audited in 20012002.105 and the retail price is Tk.and 95. 104. restaurants etc. i. even though the wholesale and retail prices exceed the MRP. Another issue is the depth of the VAT audits. regular audit is likely to contribute to better enforcement. 91. laboratories.9 Enhanced Audit: As VAT is based upon self-assessment. which has positive results. special audits have been conducted at the field level in some service units (such as pathology.15.2 VAT in Bangladesh: Perspectives and problems It is well know that VAT is imposed to realistic tax and not to regulate trade in most developing countries and therefore. The VAT collected will be the same whether or not the retailer and wholesaler are registered because all are required to use the MRP as the value of supply.110.30. the wholesale price is Tk. The value of each of these supplies the price minus the tax fraction of the price.60). the consequence would be that the wholesaler’s net VAT would be nil. 86.e. Thus. because its output tax on the supply to the retailer would be exactly equal to the input tax credit for its purchase from the manufacturer. the selling prices are in fact higher. if all of the suppliers were registered. 3. Example 2: although the MRP for the cigarettes in example 1 is Tk. All of these are MRP. 3.1. Effective audits are dependent upon the appropriate selection of the audit process is also critical to that goal. 282 of the audits resulted in no additional revenue being collected this suggests that the audit process may have been very simple (such as merely checking of the correctness of the VAT returns). Note: this rule over-rides the normal rule for working out the value of supply in section 32.e.34 of whether the supplier is the manufacturer. (this is because under the normal rule ‘value’ is the price minus the tax fraction). In more recent years.96.). that the manufacturer’s selling price is Tk.e. The recent establishment of a separate Directorate of Intelligence. in a country like Bangladesh where attitudes to tax compliance are poor and tax evasion is widespread. it is a trade-neutral tax i. more . for illustration. wholesaler. Taxpayers face slight threat that they will be audited and thus there is little deterrent effect arising from VAT audits. all of the suppliers must treat the MRP as the value of the supply. 100. retailer. or any other registered person. must pay output tax on the basis of that price (i. Presume. investigation and audit of VAT headed by a senior VAT officer suggests that greater resources are being devoted to the audit function.

Here in Bangladesh tax evasion in different stages prevail & consumers in some cases in the present form of VAT give more & in some cases get undue benefit too. Though Bangladesh is the pioneer of VAT in the SAARC region. But theoretically. In a true sense. As regards administration of VAT. Bangladesh VAT administration polices all through a price declaration. irrespective of origin of the commodity. profit made by the manufactured and /or stages of traders and VAT on the total of those. The rest of VAT is realized in a manner that was prevalent when the excise duty was there. are police measures. it must go down to the consumer. the seller is to realize VAT from the buyer and deposit to the govt. for national interest some countries exempt local produces from VAT. it still remains in the preliminary stage of VAT which is more akin to the excise than to VAT proper. in addition to any probable penalty but there is no clear and specific mention of any remedy or excuse for the cases of inadvertence of accident. These loopholes. there are lots of deviations from this ideal situation. more tax you are to pay on it. The consumer is the last buyer and naturally he does not have an opportunity to get any credit of relief. However. accompanying invoice with the transport carrying commodity up to the destination. the buyer or consumer pays for the cost of production. cost of marketing including storage and transportation cost.35 money you pay as price. In each level of transaction. treasury and take credit of the VAT he paid to procure or manufacture the commodity. we realize VAT from imported goods and from the manufacturers and not beyond that. inefficiencies & flaws need to be addressed so as to make it akin to ideal situation as far as possible. Locally manufactured goods and imported goods attract the same rate of VAT. All these are ideal and theoretical assumptions. In Bangladesh. Failure to submit return and pay VAT in time is treated as an offence and 24% annual interest is charged. These are against self-compliance and it increases compliance cost. . In each case. But in Bangladesh this is not done. It also discourages tax evasion and smuggling. VAT has a unique in –built arrangement of self-regulation and self-monitoring in the ideal form. conditions on taking tax credit etc. Rate of VAT doesn’t vary for local or imported goods.

1Introductory Years: Table 1: Contribution of VAT and Income Tax from FY91-92 to 99-00 Financial Year 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 VAT (Tk.36 3.3. In crores) 3530 3750 3940 3985 4085 4248 4270 4373 4556 Income Tax (Tk.3 Data & Information on VAT in Introductory Years & Current Years 3. In crores) 1810 1773 1860 1929 2175 2215 2430 2745 3027 Source: Bangladesh Bureau of Statistics 2007 .

37 Revenue Table 3: Share of revenue types to Total Revenue Type Tax on Income and Profit Value Added Tax(VAT) Import Duty Supplementary Duty Export Duty Excise Duty others % of total revenue in FY91-92 18% 24% 21% 1% 16% 19% 1% Source: Bangladesh Bureaue of Statistics 2007 .

38 Table 4: % of VAT to Total Revenue Financial Year 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 VAT as % of Total Revenue 24% 30% 31% 33% 35% 34% 36% 35% Source: Bangladesh Bureau of Statistics 2007 Current Years: Table 5: Share of Total Revenue in FY11-12 .

7% 7.7% Source: CPD Analysis 2011-12 Table 6: VAT as % Total Revenue and NBR .0% 10.39 Revenue Type Tax on Income and Profit Value Added Tax(VAT) Import Duty Supplementary Duty Export Duty Non-NBR Tax Non-Tax Other Taxes and Duties (%)of Total Revenue in 28.6% 1.7% 13.3% 5.7% 0.3% 33.

33 10.22 27.91 10.93 24.55 29.38 23.49 22.32 18.79 75.34 18.5 15.81 76.15 25.61 76.39 78.93 76.36 24.11 20.08 28.05 27.77 13.24 13.43 12.66 28.85 Growth Rate of Tax (%) 12.67 16.63 27.97 18.18 74.32 76.82 6.18 Source: Bangladesh Economic Review 2010 .1 29.76 75.22 8.92 76.51 13.41 77.9 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 20102011(p) 25.40 Fiscal Years VAT as % 0f total Revenue Vat as % of NBR Growth rate of VAT (%) 13.9 13.

41 .

In crore) 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 6960 8071 8575 10605 12398 13683 17013 20116 22795 27092 Revenue .42 Table 7: Contribution of VAT to Total Fiscal year Total Revenue (Tk. In crore) 4100 4788 5370 5850 6960 8924 1105 13538 16560 21005 VAT (Tk. In crore) 27670 31120 35400 39200 44868 49472 60539 69183 79848 92847 Income Tax (Tk.

With the help of this report we can evaluate economic growth of our country. which helped to improve our economic growth. government should follow proper VAT system and take appropriate steps to develop VAT sectors in our country. for improving our economic growth government should reduce corruption in VAT sector and as a citizen of Bangladeshis everyone must pay their .5 Conclusion: Finally we want to say that this report on “Impact of VAT on Economic growth in Bangladesh” may be tools for academic purposes for public finance students. By broadening and improving VAT base system in economic sectors our government can squeeze more revenue. One thing is most important that.43 Source: Bangladesh Economic review 2010 3. Every public finance students should realize their study on impact of VAT in Bangladesh. In this regard.

44 imposed VAT in due time. jeep and station wagon SD (present) 30% 30% 100% 100% 250% 350% 500% 20% 60% 30% 100% 250% 350% 500% 30% 60% 45% SD (proposed) 30% 45% . 3.6 Appendices Table-8 (rationalizing Duty-Tax for Motor Cars) Description of motor car (proposed) Cylinder capacity up to 1000 cc Cylinder capacity from (1)1001 cc to 1500cc (2)1501 cc to 1650cc Cylinder capacity 1651cc to 2000cc Cylinder capacity 2001cc to 2750cc Cylinder capacity 2751cc to 4000cc Cylinder capacity 4001 & above Microbus with Cylinder capacity 1800cc Microbus with Cylinder capacity from 1801cc to 2000cc CKD motor car. Otherwise it is not possible to develop our economic growth.

Abdur rahaman.nbr-bd.gov. 2. Ind. Bangladesh Economic review 2010. . www. BUDGET SPEECH 2011-12 Ministry of Finance. Dr. dr.org/Valueaddedtax. Md.bbs. Monjur Mrshed Mahmud. BUDGET SPEECH 2010-11 Ministry of Finance. By following different kinds of term paper. Dr. Government of Bangladesh. Kanchan Kumar Purohit. Group Research 8. www. “Taxation in Bangladesh “9th edition 2011. 3. Paper prepared under the CPD programme “Independent Review of Bangladesh development (IRBD) Released to the media on 10th June 2011.45 Table-9 (Duty tax reduction in electricity and energy sector) Description of Goods Parts of energy saving lamps imported by VAT Regd. Parts of energy saving lamps imported by commercial firms Solar operated storage heater Pressure regulator/valve for LPG Safety or relief valve for LPG Submerge welding flux Energy saving light with blast & fittings Duty Typ e CD CD CD CD CD CD SD Existing Duty (%) 0 0 25 25 25 12 60 Proposed Duty (%) 0 12 12 5 5 5 0 REFERENCE 1.html 6. 4. Dr.bd 7. 5. Government of Bangladesh. Milon Kumar Bhattacharjee. 9.

11. Victoria University of Wellington. Bangladesh Institute of Development Studies 13. School of accounting and Commercial Law.org. growth. Tax. working paper series.com. M C Smith. andrew. Unnayan Onneshan.unnayan. www.46 10. inflation and consumers.The case of the Bangladesh VAT. Board of Ministry of Finance of Bangladesh 14.Consumption Tax in Developing Countries.smith@vuw. .ac. Draft_ Vat_ law 2012 English 12. Bangladesh Economic Update.