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2. VAT is usually levied on goods and services at the rate of 15% of the value of
goods imported and supplied within Bangladesh and the services provided within
Bangladesh. Certain goods (mentioned in the First Schedule to the Act) are,
however, exempt from payment of VAT. Similarly, there are a number of services
mentioned in the Second Schedule to the Act which are exempt from VAT.
3. For the purpose of levying VAT, the value of goods and services is determined as
follows:
In the case of imported goods, the value for levying VAT is determined on the
basis of the value chargeable to import duty under Section 25 or Section 25A of
the Customs Act, 1969 plus supplementary duty and other duties and taxes
except advance income tax.
In the case of goods supplied, VAT is determined on the basis of the value
receivable by the manufacturer, producers or traders which will include the
value of inputs purchased, all charges, commissions, fees, all duties and taxes
including supplementary duty (except VAT) and profits.
5. VAT is computed on the basis of assessable value (also known as custom value or
landing cost) in the case of imported goods and on the basis of value of turn over in
the case of goods and services manufactured/produced or provided within
Bangladesh. The basis for computation of assessable value in the case of imported
goods has recently been changed. Value for the purpose of levying Custom Duty
and VAT is now taken to be the value certified by the pre-shipment inspection
agencies (PSI) with the exception of some items, which are exempted from
certification by the PSI.
6. VAT is collected by the Customs, Excise and VAT authorities. The appraisers of
Custom Houses and the inspectors of land custom and airport customs propose the
assessment of VAT, together with custom duty. The assessments are required to be
7. Registration for importers, exporters, suppliers, traders and service providers whose
annual turn over exceeds Tk 20,00,000.00 each is compulsory. Others may have
optional registration. However, exemption from registration may be granted by the
government on certain terms and conditions.
8. In the case of imported goods, VAT is leviable on all items irrespective of value. In
the case of other goods and services, VAT is leviable at the rate of 15% on
turnovers exceeding Tk 20,00,000.00. Turnovers up to Tk 20,00,000.00 are
chargeable to turnover tax at the rate of 4% of value.
9. Supplementary duty at the prescribed rates is leviable on luxury goods and the
goods and services which are socially undesirable. The latest rates of
Supplementary duty have been prescribed by the Finance Act, 2000.
12. Goods on which VAT due is not paid are liable to attachments and forfeitures by
the officers authorised by the Commissioner of Customs, Excise and VAT. Goods
forfeited after giving the owner or claimant an opportunity of being heard are
disposed of by public auction. A person guilty of violating the provisions of the
Act or the Rules made thereunder is liable to fines determined under the Rules.
13. Persons aggrieved by the decisions of the concerned departmental officers assessing
turnover tax may, within sixty days of such decisions, appeal to the Turnover Tax
Commission. A decision of the Turnover Tax Commission is final, and no legal
remedies can be sought in the court(s). Appeals against the decisions of the officers
of the rank of Additional Commissioner and below in respect of VAT lie before the
Commissioner (Appeals). Appeals against the decisions of the Commissioner(s) or
the Commissioners (Appeal) can be preferred before the Customs, Excise and VAT
Appellate Tribunal. Decisions of the Tribunal can go before the High Court
Division. Government can also review the decisions of the Tribunal.
15. VAT and Supplementary Duty can be paid into the branches of Bangladesh Bank
and the designated branches of Sonali Bank through treasury challans or through
Account Current.
16. Self-clearance of VAT is permissible, and the system has gained wide popularity
and has yielded substantially increased revenue. Computation of VAT whether
under the self-clearance system or appraisement by Custom, Excise and VAT
officials is simple. In the case of imported goods, it is usually levied at the rate of
15% of the total taxed value (see example below). In the case of goods supplied or
services provided within Bangladesh, VAT is usually levied at the rate of 15% of
total turnover. A large number of items are exempted from VAT to the extent
notified by the National Board of Revenue through SROs. An example of
computation of VAT is shown below:
review management arrangement of the tax (per Chapter 8) and consider overall
risks;
review data available on trends in income, compare actuals with targets and
budgets for each custom house or district and identify areas for further
examination;
review the application of the systems, procedures and rules for assessing,
collecting and accounting for VAT;
carry out substantive tests of the systems at VAT offices as needed; and
report findings to the appropriate authorities.
19. The main risks and possible controls on VAT are listed below:
20. Substantive audit tests should be carried out on a sample basis, based on the
checklist in Appendix 2, which is illustrative and not exhaustive.
Appendix 1
Value Added Tax (VAT)
Appendix 2
Assessment
Collection
Banking
Allocation
Arrears
Write - offs
Refunds