The Reduction of Presumptive Elements in VAT - A Comparative Analysis of the Value Added Tax (VAT) and Supplementary Duty Act, 2012, and the Value Added Tax (VAT) Act, 1991, of Bangladesh

Authors

  • Iqtiaruddin Md. Mamun Additional Commissioner of Taxes for the National Board of Revenue (NBR), Internal Resources Division (IRD), Ministry of Finance, Government of Bangladesh; Adjunct Professor at the Independent University, Bangladesh (IUB)

Keywords:

Value Added Tax (VAT), Tariff Value (TV), Truncated Base (TB), Input Tax

Abstract

The Value Added Tax (VAT) and Supplementary Duty Act, 2012 of Bangladesh, which, having already been deferred a number of times following its enactment, was scheduled to be implemented from July 01, 2017, has been postponed again, amid concerns among, and opposition from, the business community and members of the public. However, the tax authority of Bangladesh claims that the 2012 Act is superior to the existing Value Added Tax (VAT) Act, 1991, in terms of revenue mobilisation and the reduction of tax evasion. While the 1991 Act is fraught with the presumptive elements that are the major sources of tax evasion and causes of departure from the standard VAT system, the proposed Act is free of presumptive elements, so it will be closer to the standard VAT system. This paper demonstrates that the implementation of the proposed VAT Act would dramatically reduce the incentives for tax evasion as the presumptive elements have been eliminated.

References

Government of Bangladesh. (1991). Budget Speech. Dhaka, Bangladesh: Ministry of Finance, Finance Division.

National Board of Revenue. (1994). Annual Report 1992-1993. Dhaka, Bangladesh: National Board of Revenue, Ministry of Finance, Government of Bangladesh.

National Board of Revenue. (2005). A Draft Report on Strategic Plan. Dhaka, Bangladesh: National Board of Revenue, Ministry of Finance, Government of Bangladesh.

Saleheen, A. M. (2012). Presumptive Taxation under Bangladesh VAT. International VAT Monitor, 23(5), 316-321.

Smith, A. M. C., Islam, A., & Zaman, M. (2011). Consumption Taxes in Developing Countries – The Case of the Bangladesh VAT (Working Paper No. 82) . Wellington, New Zealand: Centre for Accounting, Governance and Taxation Research School of Accounting and Commercial Law, Victoria University of Wellington. Retrieved from https://www.victoria.ac.nz/sacl/centres-and-institutes/cagtr/working-papers/WP82.pdf

Volume 5.2 of JOTA - Mamun Cover

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Published

19-08-2019

How to Cite

Mamun, I. M. (2019). The Reduction of Presumptive Elements in VAT - A Comparative Analysis of the Value Added Tax (VAT) and Supplementary Duty Act, 2012, and the Value Added Tax (VAT) Act, 1991, of Bangladesh. Journal of Tax Administration, 5(2), 97–112. Retrieved from https://jota.website/jota/article/view/65

Issue

Section

Commentaries