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Effectiveness of Vat in Bangladesh

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Effectiveness of Vat in Bangladesh
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Term Paper (A research proposal)
On
Effectiveness and efficiency of Value Added Tax (VAT) system in Bangladesh

Submitted to:

Dr. Shaker Ahmed
Professor
Department of Management Studies
Faculty of Business Studies
University of Dhaka

Submitted by:

Ahmed Munirus Saleheen # 3-08-14-031
Debashis Chandra Saha # 3-09-16-015
Marzuq Mohammad Hussain # 3-07-12-019
Md. Helal Uddin Talukder # 3-09-16-027
Md. Abdul Waresh Ansary # 3-09-15-037

[pic]
Evening MBA Program
Department of Management Studies
Faculty of Business Studies
University of Dhaka
Date:31st December, 2010

Title of the study:

Effectiveness and efficiency of Value Added Tax (VAT) system in Bangladesh

1.1 Background

Bangladesh introduced the Value Added Tax (VAT) in 1991 by replacing the age-old excise duty on the domestically produced goods and services and sales tax at the importation stage. The study of the practice and problems of the VAT in different countries shows that the VAT has been introduced not only because of its revenue raising potentials but also because of its simplicity, effectiveness and efficiency, transparency, equity, and progressiveness all of which complement the establishment of good governance.

1.2 Rationale of the study/problem definition

The revenue-GDP ratio in Bangladesh is one of the lowest (8.5%) in the world. Of all the tax revenues, VAT at present is the single largest contributor to GDP. It has been found that VAT funds the government expenditure more than any other tax. In the very first year of its introduction, VAT yielded a reve25.43% more than the previous year. Starting from 3190 crore taka in FY 1991-92, VAT yielded 28,657 crore taka in FY 2008-09.VAT now accounts for 4.3% of GDP while the total contribution of tax revenue to GDP is 8.36%. But still different stake holders raise the questions of efficiency and effectiveness of the VAT system in Bangladesh. By efficiency and
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