Impacts of New Value Added Act 2012 on Entrepreneur and Consumer of Bangladesh
Authors: Islam Mohammad Tajul 
Published: December 2024

Value-Added Tax (VAT) is a form of consumption or expenditure tax. From the perspective of the buyer, it is a tax on
the purchase price, whereas, from the seller‘s point of view, it is a tax only on the "value added" to a product, material
or service, at the stage of its import or manufacture or distribution or delivery .The manufacturer remits to the
government the difference between these two amounts and retains the rest for themselves to adjust the taxes they had
previously paid on the inputs. The "value added" to a product by a business is the sale price charged to its customer,
minus the cost of materials and other taxable inputs. A VAT is like a sales tax in that ultimately only the end
consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and deposited to the
government only once, at the point of purchase by the end consumer. We could call it a burden shift mechanism and
it’s a very wide base mechanism to collect revenue from people. In connection with VAT system, the business
establishment or organization or persons work as a collector on behalf of Government. The present study was
conducted to find out the areas of impacts of New Value Added and Supplementary Tax (VAT) Act 2012 in
Bangladesh, to analyze the effects of New Value Added and Supplementary Tax (VAT) Act 2012 on the business,
mass people and government revenue of Bangladesh and to find out the ways of solution of impacts of New Value
Added and Supplementary Tax (VAT) Act 2012. The research design of the present study was survey type. The study
was conducted at Dhaka district in Bangladesh. Total 580 respondents were selected from the stake holders. Among
the stakeholders, 20 Civil Society, 20 Advocates, 20 Consumers, 20 NBR Personnel, 20 Businessmen, 20 Journalists,
20 Professionals, 400 VAT Practitioners, 40 Economists were selected for the study. Data were collected from
primary sources and secondary sources. The present study is based on both primary and secondary sources of data.
Primary data were collected from the respondents of the study area directly using different data collection techniques.
On the other hand, the study has used different relevant publications, dissertations, books, journal articles, NBR and
other reports, and NBR websites etc. as sources of secondary data. Computer Program Microsoft EXCEL was used for
data analysis. From the study it was found that 38% respondents strongly agreed that VAT evasion occurred in
Bangladesh, 50% respondents replied that the VAT system of Bangladesh is not transparent, 60 respondents replied
that the VAT and Supplementary Duty will increase Government Revenue if the VAT and Supplementary Duty Act
2012 is implemented properly, 90% respondents replied that due VAT and Supplementary Duty Act 2012 will
influence the price i.e. prices of goods and materials will increase, 66% respondents replied that the VAT and
Supplementary Duty Act 2012 will hamper business in VAT rate. 5. The Bangladesh National Board of Revenue
should undertake effectiveness analysis to determine the effectiveness of their compliance strategies. The National
Board of Revenue (NBR) should undertake a thorough communication and engagement strategy if the VAT gap
results are released to the public. The NBR should take initiative to analysis of impact of New VAT Act on input
rebate and tariff Value List and goods. VAT evasion system should be removed. If VAT accounting system is
completely online based or software based it can be possible. Before introducing online VAT system tax payers must
be familiar and trained up otherwise it may cause bad impact overall the revenue and businesses of Bangladesh.