Md Azim :
VAT Authority assumes VAT-4.3 as “Price Declaration” (which had been declared under The Value Added Tax Act, 1991).
In fact, there was no provision of such declaration before the effect (01.07.2019) of the new Value Added Tax and Supplementary Act, 2012.
The input-output coefficient declaration (VAT-4.3) has been introduced by amending the VAT & SD Act, 2012 through Finance Act, 2019 with effect from 01.07.2019.
Not only have been introduced, but also some foot notes under Note Brought in the Form VAT-4.3 has been introduced which is contradictory with the law.
For example, foot note: 2 says, if previously submitted VAT-4.3 changes by 7.5% in total value of raw materials or total value of goods, then a new declaration of input-output coefficient has to be submitted to the VAT Authority.
But section-46(1) (X) entails that if previously submitted VAT-4.3 changes by 7.5% in total value of raw materials, only then a new declaration of input-output coefficient has to be submitted to the VAT Authority.
By inserting some clauses under section-46(1); i.e.: (W), (X), (Y) it has been brought under mandatory compliance who gets credit of their input tax and typically linked this format of VAT-4.3 which carries price for raw materials consumed and value addition amount to produce a unit of product with a view to reach it’s price! But prevailing VAT Law never depicts the declared amount in VAT-4.3 to determine as value of goods to be supplied.
Section 32 Sub-section 1 to 4 of the VAT & SD Act, 2012 entails that to determine the price of a supply, subtract the amount of tax fraction from the “consideration (Fair Market Value)” of the supply. Even if any supply happens without consideration or for self-consumption (Rule-30), then the “consideration” will be fair market value. Again, Section-2(59) express that “consideration” of a supply will be fair market value subtracting discount (if any).
Situation for Determining Fair Market Value (SRO No.-180-Law/ 2019/ 37/VAT, Dated: 13/06/2019).
Value Added Tax (VAT) has become the major sources of tax revenue in Bangladesh. Among the tax revenue collection, Government has targeted to collect 38.1% in FY 2023-2024 from VAT.
As Bangladesh has graduated from Least Developed Countries (LDC) and the world is going to enter into free market trade, so it needs to increase taxes from local revenue decreasing dependency on the customs duty.
Bangladesh Government need to be reformed or amended VAT Law as like taxpayers could comply voluntarily.
To expand VAT net and to reduce compliance cost, there is no way other than implementing easily understandable and compliable VAT Laws.
SMEs are the heart of a growing economy. How many SMEs in Bangladesh can retain experts to maintain VAT activities of their businesses? So, to reduce compliance cost, unnecessary declaration (e.g.: Input-Output Coefficient Declaration), should be avoided as it can also be found from Cost of Goods Sold (COGS).
It is also to be noted that for service renderer and 100% exporter, input-output coefficient has been waived by the VAT & SD Act, 2012 and VAT & SD Rules,2016.Simplifying compliance (e.g.: keeping books & records, return format, audit etc.) increases number of taxpayers which results increased revenue.
The writer is NBR Certified VAT Consultant & Income Tax Lawyer