Tax Structure of Bangladesh
Direct tax is borne by the tax payer and can not be passed on to any person, whereas indirect tax is passed on by the tax payer so that the burden of the tax is ultimately borne by another, for example Value Added Tax(VAT) which, although paid by the businessmen, is passed on to the customers. That is, indirect tax is charged on consumption in one way or another. Indirect tax is regressive because it takes a higher portion of a poor person’s income than of a reach person’s. VAT is the same for all people. Indirect taxes do not develop any civil consciousness in the minds of tax payers because no body feels that he is paying a tax as it is concealed in price, whereas direct tax create a civic consciousness among the tax payer; they feel that they are contributing towards the state expenditure.
In the case of direct taxes, the relation between the tax payer and the revenue authorities is direct personal. But there is an indirect relation between the tax payer and tax authorities in the case of indirect taxes, for the taxes are collected unofficially through the agency of merchants. VAT and Excise duty at source while making payments of the service reindeer/clients that are liable to pay such taxes. All major changes in tax policy are effected through annual budget as contained in the Finance Bill which is discussed, debated and approved by the Parliament. Major Features of Customs Duty, VAT and Income Tax in Bangladesh: Customs Duty/Import Tax Main Features of VAT Income Tax