VAT in easy language: 25
Sunday, 17 June 2012
Md Abdur Rouf
A good number of changes have been proposed in the VAT system of Bangladesh through the Finance Bill, 2012 placed in the Parliament in continuation of the budgetary measures of Fiscal Year 2012-13 and through the Statutory Regulatory Orders (SROs), General Orders etc. issued by the National Board of Revenue (NBR). The second article in the series on these proposed major changes to be effected in the VAT system of Bangladesh is presented below.
Proposals for amendment to the Value Added Tax Act, 1991
4. A proposal has been made to add Sub-Section (2) under Section 1 of the VAT Act, 1991. The provisions of this proposed Sub-Section will require the VAT-registered persons to submit the format of his own accounting to the local VAT office, if he keeps accounts for his other needs in addition to the prescribed VAT forms. It is worth mentioning here that a person registered under VAT requires to maintain accounts as per format prescribed by various VAT forms. These forms remain annexed with VAT Rules, 1991. "Mushak-1", 'Mushak-11", "Mushak-16", "Mushak-17", "Mushak-18" and "Mushak-19" are the major forms to be used by VAT registered persons for maintaining accounts.
The provisions were there previously in the VAT system of Bangladesh to keep business records as per one's own needs in addition to the prescribed forms. These business records kept as per one's own needs and manner were called commercial documents. Provisions were not there to submit the formats of own business records to the local VAT office. The proposal for submitting format of own business records to the local VAT office will increase transparency in the accounting system of the VAT-payers and make it easier for VAT and other auditors to effectively audit the business matters.
5. A proposal has been made to amend Sub-Section (1) of Section 33 of the VAT Act, 1991. As per the proposed provisions, if any dispute, investigation or case remains pending, then VAT records regarding the matter have to be kept till disposal of the matter. It is worth mentioning here that in the VAT system of Bangladesh, generally records are to be kept for a period of six years. Previously, the related provisions stipulated that if any case remains pending, VAT records regarding the case have to be preserved till disposal of the case.
As per the proposed amendments, in addition to cases, if any dispute or investigation remain pending the same rule of keeping the records till disposal will apply. The provision will make investigation, adjudication easier because necessary documents will be available. Therefore, this will be administratively advantageous and helpful for honest VAT-payers.
6. Proposals have been made for extensive changes in the Section 37 of the VAT Act, 1991. Proposals have been made to add Sub-Section (1), (2), (2ka) and (2kha) in place of present Sub-Section (1) and (2).
In the present Sub-Section (1) of Section 37, some irregularities remain described. For any of those irregularities, minimum Taka five thousand and maximum Taka twenty five thousand fine require to be imposed. In the present Sub-Section (2) of Section 37, few matters relating to evasion of VAT and Supplementary Duty and matters relating to seizure of goods remain described. For offences under this Sub-Section, the range of fine is minimum equal and maximum one and half times of the revenue evaded.
In the proposed Sub-Section (1), irregularities of six types have been described and floor and ceiling of fine have been fixed for each type of irregularity which is minimum Taka five thousand and maximum Taka fifty thousand. In the proposed Sub-Section (2) matters relating to revenue evasion or seizure of goods remain described. Proposals have been made for a minimum half and maximum equal amount of fine for such matters. If any component of irregularities are there, proposal has been made for a minimum of Taka twenty thousand and maximum of Taka fifty thousand fine.
The proposed Sub-Section (2ka) stipulates that evaded revenue has to be paid in addition to the payment of the above fine. The proposed Sub-Section (2kha) stipulates that if any VAT registered person pays less for reasons of inadvertence or wrong explanation and if he pays the unpaid amount later, no fine will be imposed for inadvertent non-payment. This is a new concept in our VAT system. The provision is business-friendly and helpful for honest VAT payers. But it would be difficult to determine whether the evasion committed had been done intentionally of by inadvertence.
(To know more about VAT, please visit: www.vatbd.com).
Dr Md Abdur Rouf is First Secretary, Value Added Tax (VAT), National Board of Revenue (NBR). He answers VAT-related queries through this column,
if the same is sent to him by
roufcus@yahoo.com.
A good number of changes have been proposed in the VAT system of Bangladesh through the Finance Bill, 2012 placed in the Parliament in continuation of the budgetary measures of Fiscal Year 2012-13 and through the Statutory Regulatory Orders (SROs), General Orders etc. issued by the National Board of Revenue (NBR). The second article in the series on these proposed major changes to be effected in the VAT system of Bangladesh is presented below.
Proposals for amendment to the Value Added Tax Act, 1991
4. A proposal has been made to add Sub-Section (2) under Section 1 of the VAT Act, 1991. The provisions of this proposed Sub-Section will require the VAT-registered persons to submit the format of his own accounting to the local VAT office, if he keeps accounts for his other needs in addition to the prescribed VAT forms. It is worth mentioning here that a person registered under VAT requires to maintain accounts as per format prescribed by various VAT forms. These forms remain annexed with VAT Rules, 1991. "Mushak-1", 'Mushak-11", "Mushak-16", "Mushak-17", "Mushak-18" and "Mushak-19" are the major forms to be used by VAT registered persons for maintaining accounts.
The provisions were there previously in the VAT system of Bangladesh to keep business records as per one's own needs in addition to the prescribed forms. These business records kept as per one's own needs and manner were called commercial documents. Provisions were not there to submit the formats of own business records to the local VAT office. The proposal for submitting format of own business records to the local VAT office will increase transparency in the accounting system of the VAT-payers and make it easier for VAT and other auditors to effectively audit the business matters.
5. A proposal has been made to amend Sub-Section (1) of Section 33 of the VAT Act, 1991. As per the proposed provisions, if any dispute, investigation or case remains pending, then VAT records regarding the matter have to be kept till disposal of the matter. It is worth mentioning here that in the VAT system of Bangladesh, generally records are to be kept for a period of six years. Previously, the related provisions stipulated that if any case remains pending, VAT records regarding the case have to be preserved till disposal of the case.
As per the proposed amendments, in addition to cases, if any dispute or investigation remain pending the same rule of keeping the records till disposal will apply. The provision will make investigation, adjudication easier because necessary documents will be available. Therefore, this will be administratively advantageous and helpful for honest VAT-payers.
6. Proposals have been made for extensive changes in the Section 37 of the VAT Act, 1991. Proposals have been made to add Sub-Section (1), (2), (2ka) and (2kha) in place of present Sub-Section (1) and (2).
In the present Sub-Section (1) of Section 37, some irregularities remain described. For any of those irregularities, minimum Taka five thousand and maximum Taka twenty five thousand fine require to be imposed. In the present Sub-Section (2) of Section 37, few matters relating to evasion of VAT and Supplementary Duty and matters relating to seizure of goods remain described. For offences under this Sub-Section, the range of fine is minimum equal and maximum one and half times of the revenue evaded.
In the proposed Sub-Section (1), irregularities of six types have been described and floor and ceiling of fine have been fixed for each type of irregularity which is minimum Taka five thousand and maximum Taka fifty thousand. In the proposed Sub-Section (2) matters relating to revenue evasion or seizure of goods remain described. Proposals have been made for a minimum half and maximum equal amount of fine for such matters. If any component of irregularities are there, proposal has been made for a minimum of Taka twenty thousand and maximum of Taka fifty thousand fine.
The proposed Sub-Section (2ka) stipulates that evaded revenue has to be paid in addition to the payment of the above fine. The proposed Sub-Section (2kha) stipulates that if any VAT registered person pays less for reasons of inadvertence or wrong explanation and if he pays the unpaid amount later, no fine will be imposed for inadvertent non-payment. This is a new concept in our VAT system. The provision is business-friendly and helpful for honest VAT payers. But it would be difficult to determine whether the evasion committed had been done intentionally of by inadvertence.
(To know more about VAT, please visit: www.vatbd.com).
Dr Md Abdur Rouf is First Secretary, Value Added Tax (VAT), National Board of Revenue (NBR). He answers VAT-related queries through this column,
if the same is sent to him by
roufcus@yahoo.com.