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Value Added TAX & Supplementary Duty ACT-2012
The Value Added Tax (VAT) and Supplementary Duty Act of Bangladesh was enacted in 2012. However, specific details of tax laws and regulations can change, and it's essential to refer to the latest legal documents or consult with a tax professional for the most up-to-date information.
The VAT and Supplementary Duty Act of 2012 in Bangladesh introduced significant changes to the country's taxation system. It aimed to simplify the tax structure and broaden the tax base. Some key features of the VAT and Supplementary Duty Act-2012 include: VAT Rates: The Act introduced a single VAT rate structure, eliminating the multiple rates that existed before.
However, certain goods and services may be subject to zero-rated or exempt status. Business Registration: The Act requires businesses to register for VAT if their annual turnover exceeds a specified threshold. Registered businesses are eligible to claim input tax credits on their purchases.
Electronic Fiscal Devices (EFDs): The use of EFDs was mandated for certain businesses to ensure transparency and accuracy in tax reporting. Exempt and Zero-Rated Supplies: Some goods and services may be exempt or subject to a zero rate. Exempt supplies do not attract VAT, while zero-rated supplies are taxed at a 0% rate. Supplementary Duty:
In addition to VAT, the Act introduced a system of supplementary duty on certain goods and services. Supplementary duty is imposed in addition to the standard VAT. Reverse Charge Mechanism: The Act introduced a reverse charge mechanism, where the responsibility for paying VAT is shifted from the seller to the buyer in specific transactions.
Electronic VAT (eVAT) System: The Act aimed to digitize the VAT system, and businesses were encouraged to use the Electronic VAT (eVAT) system for online submission of returns and payments. Keep in mind that tax laws are subject to change, and it's crucial to consult the latest legal documents or seek advice from tax professionals to ensure compliance with the current regulations.
Under the Value Added Tax and Supplementary Duty Act, 2012, there are four (04) types of tax are levied in Bangladesh like,
01.Value Added Tax (VAT)- (Section 15)
02. Advance tax(ATV) (Article 31)
03. Supplementary Duty (SD)- (Section 55)
04. Turnover tax (Article 63)
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Stages of Taxation are imposing in Bangladesh like,
Under the Value Added Tax and Supplementary Duty Act, 2012, taxes are levied in two stages, namely:
01. Import stage:
Value-added tax, advance tax, and supplementary duty
02. Supply stage:
Value Added Tax, Supplementary Duty, and Turnover Tax
01. Import stage(Short description):-
Value Added Tax(VAT):
Value Added Tax is levied on taxable imports. VAT may even be levied on imports that are not subject to import duty. VAT is applicable on all imports except the imports included in the second part of the first schedule. However, if a product is brought for export within Bangladesh for consumption without redemption or concession, it will not be taxable (Article 30).
Supplementary Duty(SD):
Supplementary Duty is levied on the import of supplementary dutiable goods. Supplementary duty is applicable on the import of goods included in the first part of the second schedule.
Advance Tax(ATV):
Every registered or non-registered or enlisted person will pay advance tax at the rate of 3% as tax payable on the subsequent supply of imported goods for his economic activities. All registered or unregistered or enlisted or enlisted persons holding BIN will pay advance tax on all their imports. Although the 1991 law imposed Advance Trade VAT (ATV) at the rate of 4% only on commercial importers, the new law requires all importers to pay advance tax (ATV).
02. Supply stage(Short description):-
Value Added Tax:
Value Added Tax is levied on taxable supplies within the country. The 1991 VAT system had three phases viz., Production, trade, and service, with systematic differences in taxation. In the present system, the VAT system within the country is not divided at any stage. Wherever economic activity is conducted, VAT applies to supplies made in the course of economic activity.Wherever economic activity is conducted, VAT applies to supplies made in the course of economic activity.
Supplementary Duty(SD):
Supplementary duty is levied on the supply of goods and services leviable on supplementary duty. Supplementary duty will be applicable at the rate prescribed in the schedule on supply of second scheduled goods and services.
It may be recalled that vat was imposed within the country on supply but supplementary duty was imposed on the supply of goods or services. That is, nothing else, such as the supply of immovable property, is supplementary.
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Turnover tax:
Turnover tax is applicable to those whose annual taxable turnover ranges from Rs. 30 lakhs to Rs. 60 lakhs and does not provide supplementary duty levied goods or services.
Different Tax rates are:
01. Import & Supply - 15%
02. For Export Tax Rate-0%
03. Advance tax(ATV) Rate-3%
04. Turnover tax rate-3%
Who is tax prayer:-
A person registered or listed under the VAT Act is responsible for collecting VAT from the consumer, keeping his account and paying it to the government treasury. Individuals involved in taxable supplies and taxable imports are liable to pay taxes.
What is tax Supply:
Domestic taxes are levied on part of economic activity or on supplies supplied in its course. Section (94) of Section 2 of the Act defines the supply. The definition is so broad that almost all financial activities will be considered supply. Analyzing the definition, 5 elements of supply are found.
Based on that definition, supply can be divided into 5 parts. E.g.
(A) Any supply:
Supply is a comprehensive issue. Generally, supply means to exchange something. He cannot be confined within the boundaries of goods, services, or real estate.
(B) Supply of goods:
All types of visible movable property except shares, stocks, securities, and money are treated as "goods". The supply may be of the product. The sale, exchange, or otherwise transfer of the right of sale as the owner, including sale through the hire purchase agreement, granting the right to use the product, lease, rent, or otherwise, and supply of goods under finance lease will also be considered as supply.
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(C) Service delivery:
Everything is exchangeable except goods, real estate, and money. Service delivery is a supply that is not a supply of goods, money, or real estate. However, the provision of services may also include
(1) grant,
(2) assignment,
(3) termination,
(4) surrender of any rights,
(5) provision of any facility or benefit. ,
(6) an agreement to refrain from or accept any action, condition, or action, and
(7) to issue, transfer or surrender licenses, permits, certificates, special privileges, permits, or similar rights.
(D) Provision of immovable property:
Immovable property means the content of the supply of immovable property, whether the object supplied is property or a combination of the respective rights of the property (chosen inaction) in the land, or any building on the land or any structure erected or attached to it.
Provision of immovable property is-
(1). Any right or interest on land,
(2). Personal right involving any right or interest on land,
(3) .Any licensing or contractual right applicable to land for the purpose of occupying the land including the provision of housing, and
(4). The right to acquire any of the things described or the option to exercise that right in the future.
(E) Hybrid supply:
In reality, very few supplies can go where only goods, or services, or real estate are left alone. In most cases, the supply of goods is associated with one or another service or service delivery with one or another product. Supply of goods, services, or any 2 or all of the real estate can be completed. Such supplies are called hybrid supplies. For example, in the case of a supply of computer, its installation or its training is involved. The installation or training of the computer is a service. As a result, this supply can be considered as a hybrid supply.
Again, it can be divided into 3 parts based on the nature of supply. E.g .
(A) General supply:
General supply refers to those supplies which end in a single supply, have a counter-supply, and are not dependent on any other supply. This type of supply is commonly seen in business cases.
(B) Hierarchical or periodic supply:
Progressive supply is the supply that is continuous. Such as electricity, gas supplied in the pipeline, water killing. Periodic supplies, on the other hand, are supplies that occur at regular intervals, such as a supply in installments. For example, on the basis of an annual contract, the issue of leasing a Jalmahal for 5 years can be mentioned.
Terms of hierarchical or periodic supply:
(01).any supply made under contractual or periodic payment terms, such as the supply of televisions sold on payment terms in installments;
(02). any lease, any provision made under the Hire of License (including finance lease), such as: lease for the collection of tools for waterways or bridges;
(03). any supply directly provided for construction or engineering activities, reconstruction, or extension of buildings.
Special Precautions for Provisional or Periodic Supplies:
(04.)each supply of successive or periodic supplies shall be treated as a separate supply;
(05).if each supply of a hierarchical or periodic supply cannot be immediately separated, the supply shall be treated as a separate supply period, each consisting with the proportion of the said supply and with which each individual part of the periodic supply shall be proportionate;
(06). For each part of the provision relating to the right to use the lease or property, the continued period of such use of the lease or property shall be deemed to be the period of supply.
If you are interested to the next part- Value Added TAX & Supplementary Duty ACT-2012(Part-05) please....