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Financial Accounting / Re: IFRS 15
« on: February 27, 2020, 05:31:45 PM »
Presentation in financial statements
Contracts with customers will be presented in an entity’s statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity’s performance and the customer’s payment. [IFRS 15:105]

A contract liability is presented in the statement of financial position where a customer has paid an amount of consideration prior to the entity performing by transferring the related good or service to the customer. [IFRS 15:106]

Where the entity has performed by transferring a good or service to the customer and the customer has not yet paid the related consideration, a contract asset or a receivable is presented in the statement of financial position, depending on the nature of the entity’s right to consideration. A contract asset is recognised when the entity’s right to consideration is conditional on something other than the passage of time, for example future performance of the entity. A receivable is recognised when the entity’s right to consideration is unconditional except for the passage of time.

Contract assets and receivables shall be accounted for in accordance with IFRS 9. Any impairment relating to contracts with customers should be measured, presented and disclosed in accordance with IFRS 9. Any difference between the initial recognition of a receivable and the corresponding amount of revenue recognised should also be presented as an expense, for example, an impairment loss. [IFRS 15:107-108]


The disclosure objective stated in IFRS 15 is for an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Therefore, an entity should disclose qualitative and quantitative information about all of the following: [IFRS 15:110]

its contracts with customers; the significant judgments, and changes in the judgments, made in applying the guidance to those contracts; and any assets recognised from the costs to obtain or fulfil a contract with a customer.
Entities will need to consider the level of detail necessary to satisfy the disclosure objective and how much emphasis to place on each of the requirements. An entity should aggregate or disaggregate disclosures to ensure that useful information is not obscured. [IFRS 15:111]

In order to achieve the disclosure objective stated above, the Standard introduces a number of new disclosure requirements. Further detail about these specific requirements can be found at IFRS 15:113-129.


Effective date and transition
The standard should be applied in an entity’s IFRS financial statements for annual reporting periods beginning on or after 1 January 2018. Earlier application is permitted.  An entity that chooses to apply IFRS 15 earlier than 1 January 2018 should disclose this fact in its relevant financial statements. [IFRS 15:C1]

When first applying IFRS 15, entities should apply the standard in full for the current period, including retrospective application to all contracts that were not yet complete at the beginning of that period. In respect of prior periods, the transition guidance allows entities an option to either: [IFRS 15:C3]

apply IFRS 15 in full to prior periods (with certain limited practical expedients being available); or retain prior period figures as reported under the previous standards, recognising the cumulative effect of applying IFRS 15 as an adjustment to the opening balance of equity as at the date of initial application (beginning of current reporting period).

Financial Accounting / IFRS 15
« on: February 27, 2020, 05:31:29 PM »
Summary of IFRS 15
The objective of IFRS 15 is to establish the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer. [IFRS 15:1] Application of the standard is mandatory for annual reporting periods starting from 1 January 2018 onwards. Earlier application is permitted.


IFRS 15 Revenue from Contracts with Customers applies to all contracts with customers except for: leases within the scope of IAS 17 Leases; financial instruments and other contractual rights or obligations within the scope of IFRS 9 Financial Instruments, IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures; insurance contracts within the scope of IFRS 4 Insurance Contracts; and non-monetary exchanges between entities in the same line of business to facilitate sales to customers or potential customers. [IFRS 15:5]

A contract with a customer may be partially within the scope of IFRS 15 and partially within the scope of another standard.  In that scenario: [IFRS 15:7]

if other standards specify how to separate and/or initially measure one or more parts of the contract, then those separation and measurement requirements are applied first. The transaction price is then reduced by the amounts that are initially measured under other standards; if no other standard provides guidance on how to separate and/or initially measure one or more parts of the contract, then IFRS 15 will be applied.

Key definitions
[IFRS 15: Appendix A]

An agreement between two or more parties that creates enforceable rights and obligations.
A party that has contracted with an entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration.
Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in an increase in equity, other than those relating to contributions from equity participants.
A promise in a contract with a customer to transfer to the customer either:
a good or service (or a bundle of goods or services) that is distinct; or a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.
Income arising in the course of an entity’s ordinary activities.
The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

Accounting requirements for revenue
The five-step model framework

The core principle of IFRS 15 is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  This core principle is delivered in a five-step model framework: [IFRS 15:IN7]

Identify the contract(s) with a customer Identify the performance obligations in the contract Determine the transaction price Allocate the transaction price to the performance obligations in the contract Recognise revenue when (or as) the entity satisfies a performance obligation.
Application of this guidance will depend on the facts and circumstances present in a contract with a customer and will require the exercise of judgment.

Step 1: Identify the contract with the customer

A contract with a customer will be within the scope of IFRS 15 if all the following conditions are met: [IFRS 15:9]

the contract has been approved by the parties to the contract; each party’s rights in relation to the goods or services to be transferred can be identified; the payment terms for the goods or services to be transferred can be identified; the contract has commercial substance; and it is probable that the consideration to which the entity is entitled to in exchange for the goods or services will be collected.
If a contract with a customer does not yet meet all of the above criteria, the entity will continue to re-assess the contract going forward to determine whether it subsequently meets the above criteria. From that point, the entity will apply IFRS 15 to the contract. [IFRS 15:14]

The standard provides detailed guidance on how to account for approved contract modifications. If certain conditions are met, a contract modification will be accounted for as a separate contract with the customer. If not, it will be accounted for by modifying the accounting for the current contract with the customer. Whether the latter type of modification is accounted for prospectively or retrospectively depends on whether the remaining goods or services to be delivered after the modification are distinct from those delivered prior to the modification. Further details on accounting for contract modifications can be found in the Standard. [IFRS 15:18-21].

Step 2: Identify the performance obligations in the contract

At the inception of the contract, the entity should assess the goods or services that have been promised to the customer, and identify as a performance obligation: [IFRS 15.22]

a good or service (or bundle of goods or services) that is distinct; or a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.
A series of distinct goods or services is transferred to the customer in the same pattern if both of the following criteria are met: [IFRS 15:23] 

each distinct good or service in the series that the entity promises to transfer consecutively to the customer would be a performance obligation that is satisfied over time (see below); and a single method of measuring progress would be used to measure the entity’s progress towards complete satisfaction of the performance obligation to transfer each distinct good or service in the series to the customer.
A good or service is distinct if both of the following criteria are met: [IFRS 15:27]

the customer can benefit from the good or services on its own or in conjunction with other readily available resources; and the entity’s promise to transfer the good or service to the customer is separately idenitifable from other promises in the contract.
Factors for consideration as to whether a promise to transfer goods or services to the customer is not separately identifiable include, but are not limited to: [IFRS 15:29]

the entity does provide a significant service of integrating the goods or services with other goods or services promised in the contract; the goods or services significantly modify or customise other goods or services promised in the contract; the goods or services are highly interrelated or highly interdependent.
Step 3: Determine the transaction price

The transaction price is the amount to which an entity expects to be entitled in exchange for the transfer of goods and services. When making this determination, an entity will consider past customary business practices. [IFRS 15:47]

Where a contract contains elements of variable consideration, the entity will estimate the amount of variable consideration to which it will be entitled under the contract. [IFRS 15:50] Variable consideration can arise, for example, as a result of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties or other similar items. Variable consideration is also present if an entity’s right to consideration is contingent on the occurrence of a future event.  [IFRS 15:51]

The standard deals with the uncertainty relating to variable consideration by limiting the amount of variable consideration that can be recognised. Specifically, variable consideration is only included in the transaction price if, and to the extent that, it is highly probable that its inclusion will not result in a significant revenue reversal in the future when the uncertainty has been subsequently resolved. [IFRS 15:56]

However, a different, more restrictive approach is applied in respect of sales or usage-based royalty revenue arising from licences of intellectual property. Such revenue is recognised only when the underlying sales or usage occur. [IFRS 15:B63]

Step 4: Allocate the transaction price to the performance obligations in the contracts

Where a contract has multiple performance obligations, an entity will allocate the transaction price to the performance obligations in the contract by reference to their relative standalone selling prices. [IFRS 15:74] If a standalone selling price is not directly observable, the entity will need to estimate it. IFRS 15 suggests various methods that might be used, including: [IFRS 15:79]

Adjusted market assessment approach Expected cost plus a margin approach Residual approach (only permissible in limited circumstances).
Any overall discount compared to the aggregate of standalone selling prices is allocated between performance obligations on a relative standalone selling price basis. In certain circumstances, it may be appropriate to allocate such a discount to some but not all of the performance obligations. [IFRS 15:81]

Where consideration is paid in advance or in arrears, the entity will need to consider whether the contract includes a significant financing arrangement and, if so, adjust for the time value of money. [IFRS 15:60] A practical expedient is available where the interval between transfer of the promised goods or services and payment by the customer is expected to be less than 12 months. [IFRS 15:63]

Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

Revenue is recognised as control is passed, either over time or at a point in time. [IFRS 15:32]

Control of an asset is defined as the ability to direct the use of and obtain substantially all of the remaining benefits from the asset. This includes the ability to prevent others from directing the use of and obtaining the benefits from the asset. The benefits related to the asset are the potential cash flows that may be obtained directly or indirectly. These include, but are not limited to: [IFRS 15:31-33]

using the asset to produce goods or provide services; using the asset to enhance the value of other assets; using the asset to settle liabilities or to reduce expenses; selling or exchanging the asset; pledging the asset to secure a loan; and holding the asset.
An entity recognises revenue over time if one of the following criteria is met: [IFRS 15:35]

the customer simultaneously receives and consumes all of the benefits provided by the entity as the entity performs; the entity’s performance creates or enhances an asset that the customer controls as the asset is created; or the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date.
If an entity does not satisfy its performance obligation over time, it satisfies it at a point in time. Revenue will therefore be recognised when control is passed at a certain point in time. Factors that may indicate the point in time at which control passes include, but are not limited to: [IFRS 15:38]

the entity has a present right to payment for the asset; the customer has legal title to the asset; the entity has transferred physical possession of the asset; the customer has the significant risks and rewards related to the ownership of the asset; and the customer has accepted the asset.
Contract costs

The incremental costs of obtaining a contract must be recognised as an asset if the entity expects to recover those costs. However, those incremental costs are limited to the costs that the entity would not have incurred if the contract had not been successfully obtained (e.g. ‘success fees’ paid to agents). A practical expedient is available, allowing the incremental costs of obtaining a contract to be expensed if the associated amortisation period would be 12 months or less. [IFRS 15:91-94]

Costs incurred to fulfil a contract are recognised as an asset if and only if all of the following criteria are met: [IFRS 15:95]

the costs relate directly to a contract (or a specific anticipated contract); the costs generate  or enhance resources of the entity that will be used in satisfying performance obligations in the future; and the costs are expected to be recovered.
These include costs such as direct labour, direct materials, and the allocation of overheads that relate directly to the contract. [IFRS 15:97]

The asset recognised in respect of the costs to obtain or fulfil a contract is amortised on a systematic basis that is consistent with the pattern of transfer of the goods or services to which the asset relates. [IFRS 15:99]

Further useful implementation guidance in relation to applying IFRS 15

These topics include:

Performance obligations satisfied over time Methods for measuring progress towards complete satisfaction of a performance obligation Sale with a right of return Warranties Principal versus agent considerations Customer options for additional goods or services Customers’ unexercised rights Non-refundable upfront fees Licensing Repurchase arrangements Consignment arrangements Bill-and-hold arrangements Customer acceptance Disclosures of disaggregation of revenue
These topics should be considered carefully when applying IFRS 15.

The depositors’ money in the banks and financial institutions will be more secure under the proposed ‘Deposit Protection Act, 2020’ as depositors will get Taka 1,00,000 within 90 days if any bank becomes bankrupt and rest of the money will be returned from the assets of the bank concerned.

“The ‘Bank Company Act’ and the ‘Deposit Insurance Act’ ensure the security of depositors. If the new law is made effective, the depositors of the financial institutions and the scheduled banks will be more secure,” said Bangladesh Bank (BB) Chief Spokesperson M Serajul Islam at a press conference at the Bangladesh Bank (BB) headquarters, BSS reports.

He urged all not to be anxious or frightened by the reports published in the different media recently.

Under the existing law, he informed, if the central bank declare bankrupt to any bank, the depositors money will be paid from the ‘Deposit Insurance Trust Fund’ within a hundred and eighty days.

As per the deposited money in the current insurance fund, Serajul Islam said, 92 percent depositors’ accounts are fully insured.

Moreover, he said, in the bank company act, there is a clear provision for repayment of all deposits from the assets of the bank in case a scheduled bank falls.

As per the proposed ‘Deposit Protection Act, he said, the government is likely to double the amount of insurance coverage. If the new provision will come to effect, about 96 percent of the depositors will be fully insured, he added.

The BB chief spokesperson expected that 100 percent deposit will be insured in future as the ‘Deposit Protection Trust fund’ invests in the public Treasury bond sector and the profit from the investment and the premium paid by the scheduled banks increases day by day.

BBA Discussion Forum / IMF calls DR Congo to halt central bank loans
« on: February 27, 2020, 05:24:29 PM »

IMF calls DR Congo to halt central bank loans
Published : Thursday, 27 February, 2020 at 4:37 PM  Count : 40
Observer Online Desk

IMF calls DR Congo to halt central bank loans
IMF calls DR Congo to halt central bank loans

The International Monetary Fund (IMF) expressed concern over the Democratic Republic of Congo’s 2020 budget and urged its central bank to stop drawing down foreign currency reserves and advancing money to the government.

In late December, the IMF paid $ 368 million to the Commonwealth Democratic Republic to tackle the issue of emergency balance.

That same month, the country’s 2020 budget draft was estimated at $ 10.59 billion, equivalent to about 1 million countries, of which two-thirds live on less than $ 2 a day.

On Wednesday, IMF staff, after a fact-finding mission, issued a statement concerned with spending pressure and concerns arising from unnecessary revenue, which caused the central bank to renew its government and erode its foreign reserves.

The fund welcomed a treasury plan published by the finance ministry, considering it was "consistent with realistic revenue estimates.

A ministry-issued plan on February 1 has allocated $ 1.8 billion to spend for 2020 - more than half of the original budget plan.-Internet

BBA Discussion Forum / Concern over ailing banking sector pulls down stocks
« on: February 27, 2020, 05:21:50 PM »

Key index falls for five straight days

DSEX, the key index of Dhaka Stock Exchange (DSE), fell on Wednesday for the five straight sessions amid concerns over the ailing banking sector due to the implementation of the single-digit lending rate.

The DSEX settled at 4,549 after losing 72.09 points or 1.56% on Wednesday's session. Total turnover took a negative turn and ended at Tk627 crore, which is 0.4% less than that of the last session.

Market insiders said that the implementation of the single-digit lending rate would slow down credit flow to the private sector. They also think that the economy and capital market will slow down too.

The banking sector is already being affected by this impending policy change — in the past two trading sessions it lost 4.4% in value.

Telecommunication, bank, NBFI and food and allied sectors observed the highest sell pressure from the investors, they also said.

Two other indices also ended lower. The DS30 index, comprising blue chips, fell sharply by 33.26 points to close at 1,517 and the DSES index lost 9.61points to settle at 1,060.

Losers took a strong lead over the gainers, as out of 356 issues traded, 226 closed lower, 84 ended higher and 46 remained unchanged on the DSE trading floor.

EBL Securities Limited in its daily market commentary said that the market started to take a hit from the early session and registered a stiff fall at the end as investors grieved on the probable impact of 9% lending rate on the economy, added to that reluctance in the formation of special fund even after two weeks of BB’s declaration seemed to lay investors in a doubt about a soon-to-be market recovery.

Among large-cap companies, Brac Bank (-9.5%), BATBC (-1.8%) and Grameenphone (-1.5%) were hit the most.

Grameenphone topped the turnover chart with shares worth Tk16 crore changing hands, closely followed by Indo-Bangla Pharma, VFS Thread Dyeing, Brac Bank and National Polymer.

Central Pharma was also the day’s best performer, posting a gain of 9.56% while Brac Bank was the worst loser, losing 9.5%.

Market insiders said that the Grameenphone, the large-cap stock, got a beating on court’s order to pay remaining Tk1,000 crore in 90 days over its disputed audit claim that led the market fall while many nervy investors continued to sell shares to opt for safer and more profitable securities.

The port city’s bourse, Chittagong Stock Exchange also registered loss at the end of the session. The selected index, CSCX and all Share Price Index, CASPI declined by 128.4 and 207.8 points respectively.

Thanks for sharing

Thanks for sharing

Thanks for sharing

MBA Discussion Forum / Savings tools sale set to be double the target
« on: February 26, 2020, 09:23:52 AM »
The sale of the instrument is set to cross even the revised target of Tk45,000 crore set for the outgoing financial year

Net sale of National Savings Certificates (NSC) is likely to be more than double its original target of Tk26,197 crore this fiscal year ending June 30, as per sources at Internal Resources Division (IRD).

The sale of the instrument is set to cross even the revised target of Tk45,000 crore set for the outgoing financial year , as the government in the first 10 months of the 2019-20 fiscal year already borrowed Tk43,474.42crore from the savings tools.

Officials at the Directorate of National Savings Certificates have said that the mad rush for the lucrative instruments further intensified soon after the proposed 10% tax at source was announced in the draft budget.

“It seems the sale (of savings certificates) will even overshoot the revised target by Tk6,000 crore to Tk7,000 crore, and be more than double the original estimate,” a senior official at the IRD under the finance ministry has told Dhaka Tribune.

He finds borrowing target of Tk27,000 crore set in the revised budget from the savings tools unrealistic as the instruments are becoming increasingly an attractive area to invest.

In July-April of 2017-18 fiscal year, government’s borrowing from the savings certificates stood at Tk40,063.19crore.

“New rules and regulation will be implemented to sell the savings certificates in the next (2019-2020) fiscal year. As a result, public fear resulted in increased investment in the savings certificates ,” Agrani Bank Chairman Dr Zaid Bakht points out.

Zaid,  also research director of Bangladesh Institute of Development Studies, says: “High interest rates on national savings tools than banks’ deposit rates is another reason for the high demand for the tools.”

For 2018-2019 fiscal year, the government targeted that Tk26,197crore would be collected from national savings scheme sales. However, the government increased the targets to Tk45,000crore in the revised budget due to its growing demand.

High yields on national savings instruments is encouraging a large number of small investors and pushing up the government's debt burden.

Officials at the Directorate of National Savings Certificates cite the “striking difference” in the interest rates on offer has been encouraging people to move their money from banks to savings certificates.

While banks are typically offering 6-7% interest on deposits, savings schemes offer between 11.04% and 11.76%.

Government moved to introduce National Savings Scheme Online Management System from July this year to check abuses in investments in the government savings tools.

As part of the move, the finance ministry launched the system on February 3 this year on a trial basis and instructed all the entities to install the system by June this year.

There are allegations that many high net worth individuals invest huge amount of money to get high interest, prompting the government to install the system, officials concerned said.

For FY2019-20 fiscal year, the overall budget deficit (excluding grants) is expected to be Tk1,45,000 crore, about 5% of the national GDP, while Tk27,000 crore will come from National Savings Schemes.

MBA Discussion Forum / Exporters to bear brunt of new gas price hike
« on: February 26, 2020, 09:23:29 AM »
For industrial use, gas price has been increased by 37.88% from Tk7.76 to Tk10.70 per cubic metre, while for captive power it has been increased by 43.97% from Tk9.62 to Tk13.85

Bangladeshi exporters, especially those in apparel and leather sectors, will lose competitive edge in global markets as they fear that the latest spell of hike in gas prices will push up production cost.

The Bangladesh Energy Regulatory Commission (BERC) on Sunday issued a circular increasing gas prices at different rates effective from Monday.

For industrial use, gas price has been increased by 37.88% from Tk7.76 to Tk10.70 per cubic metre, while for captive power it has been increased by 43.97% from Tk9.62 to Tk13.85.

Gas price for the power sector has been increased from Tk3.16 to Tk4.45  per cubic metre with a 40.82% rise. 

In immediate reactions, industrialists and trade body leaders expressed deep concerns over the losing competitiveness in global export destinations.

“On the basis of the information I have, gas bill will take up around 1.5% of the manufacturing cost. So 38% increase in gas price means almost 1% increase in production cost. This may not sound much in terms of percentage, but for an industry struggling for every penny this will be another blow,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Rubana Huq has told Dhaka Tribune.

"Now, given the fact that the supply situation of gas did not improve and factories are suffering from pressure fluctuations, we are in tipping point with regard to pricing," Huq mentions.

Entrepreneurs are not feeling encouraged to invest due to numerous challenges and this sudden increase in gas price cripples their financial plan, such as increase in gas price will only add up to production cost making the business difficult for the SMEs whose break even is on a thin ice now, the trade leader finds.

Meanwhile, primary textile sector people have urged the government to increase prices of gas in phases, which they think will mitigate the pressure.

“From the current fiscal year, the government is implementing VAT. In this context, a sharp rise in gas prices will be a huge burden for the textile and apparel sector,” Bangladesh Textile Mills Association President Mohammad Ali Khokon tells Dhaka Tribune.

Moreover, he says, in the apparel sector compliance has cost huge but the prices of finished goods did not increase.

"So the rise in gas prices will leave the textile sector highly dependent on captive power, in tougher competition," Khokon fears.

He thinks the government should increase the prices of gas in phases so as not to put extra pressures on the manufacturers.   

Meanwhile, former Dhaka Chamber of Commerce and Industry (DCCI) President Abul Kasem Khan warns that the rise in gas prices will put an extra pressures on production cost.

The government should have done it taking more time so that investment will be encouraged and businesspeople will get breathing space, he notes.

Besides, the leather sector, the second largest export earner after the apparel industry, will also face competition as the price of raw materials will go up.

“Though there is no direct use of gas in finished leather goods, the gas price hike will hit the sector as gas is used in tanneries, which supply raw materials for the sector,” Md Saiful Islam, managing director of Picard Bangladesh Limited, a leather goods exporter, tells Dhaka Tribune.

On top of that, businesspeople also call for a long-term policy on gas and electricity so that people can make investment decisions with a sustained and futuristic aim.

According to Petro Bangla data, in the fiscal year 2017-18, Bangladesh produced 966684.63 mmcm gas.

Of the total production, 40.60% was used in the power sector, the highest, while 16.96% was used in industry, followed by captive power 16.35%, domestic 16.06%, fertilizer 4.38%, compressed natural gas (CNG) 4.70%, commercial 0.83%, and tea estates 0.10%.

MBA Discussion Forum / New VAT regime
« on: February 26, 2020, 09:23:05 AM »
Rate for e-commerce and ride sharing service cut to 5%

New value added tax (VAT) regime will start on Monday with a few changes brought in the final budget for 2019-20 fiscal year, as the government is committed to implementing the much talked-about VAT and Supplementary Duty Act, 2012 from the first day of new financial year.

Instead of previous seven slabs, the businesspeople now have to pay VAT at 15 %, 10%, 7.5% and 5% rates.

The 15% rate will be applicable only for the imported and luxury items, while wholesalers and retail sellers have to pay at the rate of 5%. Other businesses will pay VAT at 7.5% and 10% rates.

Besides, there will be special rates for a few sectors including pharmaceuticals, petroleum, rod and iron and yarns.

Officials at the National Board of Revenue (NBR) have said they have set the four-tier VAT rates for different sectors. But only those who will pay VAT at 15% rate will enjoy rebate or refund facility.

The traders will get VAT rebate once they pay surplus amount of VAT or double VAT, they add.

“If anyone thinks his estimated VAT is higher than his payable amount, he can switch to 15% VAT rate and take rebate,” NBR Second Secretary Md Tariq Hassan clarifies.

He informs that the government has cut down VAT on ride sharing and e-commerce services from the proposed 7.5% to 5% in the Finance Bill 2019.

The sectors had been out of VAT purview from the beginning.

The government enacted the VAT and Supplementary Duty Act, 2012 seven years ago but could not implement it amid protests from business community.

But, this year both the parties came to a settlement, said AHM Mustafa Kamal in his budget speech.

“To ensure effective implementation of this Act, we will provide all types of logistical support including necessary manpower,” he added.

Kamal informed that a joint working group, comprising officials from the government and private sectors, would oversee the implementation of the new VAT law.

Meanwhile, businesspeople have welcomed the new VAT law in a post-budget reaction in the capital, saying they do not have any objection to it, as the government has kept multiple rates as demanded.

President of the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) Sheikh Fazle Fahim, however, has urged the authorities concerned not to harass businesspeople while implementing the new VAT act, saying that they have no discord with the NBR.

The new VAT act excluded traders having annual turnover up to Tk50 lakh from the VAT net, while it imposed a 4% turnover tax for the small traders having turnover up to Tk3 crore.

The VAT registration threshold has been set at Tk3 crore, which was Tk80 lakh earlier.

Besides, a total of 98 products and 42 services will enjoy VAT exemption facility in the new fiscal year, according to the Finance Bill, 2019.

Previously exempted heavy industries like automobiles, refrigerators, freezers, air conditioners, motorcycles, mobile industries and government mega projects will also enjoy the facility.

However, products, which had been out of Vat net, such as plastic and aluminum items, soybean oil, palm oil, sunflower oil, mustard oil will be brought under the VAT purview.

Besides, astrologists, marriage media services and program producers of entertainment industry have been brought under the VAT net from today.

Mandatory EFD for 24 business categories

The NBR made electronic fiscal device (EFD) mandatory for 24 types of businesses in city corporations and district headquarters from the new fiscal year.

The businesses are hotel, restaurant and fast-food shop, decorator and catering service, motor workshop, advertising agency, printing press, community centre, sweetmeat, jeweler, furniture, courier service, beauty parlour, fitness centre, coaching centre, social and athletic club, apparel outlet, electronics sales centre, outlets at shopping centre, department store, super-shop, wholesale outlet, laundry, cinema hall and security service.   

Besides, the NBR or vat commissioners can make mandatory EFD for any service or business, if they feel necessary.

An EFD is a device which produces the digital record of every sale and transaction which will instantly send the data to a central server automatically.

MBA Discussion Forum / E-wallet transaction limit doubles
« on: February 26, 2020, 09:22:13 AM »

For personal E-wallet account, the maximum balance has been set at Tk400,000

Bangladesh Bank on Tuesday raised the transaction limit for E-wallet account from Tk50,000 to Tk100,000 a day to encourage cashless transaction in the economy.

The facility, however, will not be applicable for mobile financial services (MFSs), according to a central bank circular.

For personal E-wallet account, the maximum balance has been set at Tk400,000.

Any individual could transact a maximum amount of Tk100,000 a day through the system, while the monthly transaction limit has been fixed at Tk400,000, the circular adds.

The new limits of transaction through E-wallet will be effective immediately, the circular says.

However, the maximum transaction ceiling will not be applicable for the other transactions like person to business, business to person or business to business, it elaborates.

Experts say E-wallet account is an account to account payment system, having no cash out facility in this digital payment system. The E-wallet account must be linked with one's bank account.

“Now people buy plane tickets, pay credit card bills, gas and electricity bills and buy goods from e-commerce companies through E-wallet accounts. To facilitate transaction under the E-wallet method, the ceiling has been increased,” Md Mezabul Haque, general manager, Payment System Department of Bangladesh Bank, told Dhaka Tribune.

MBA Discussion Forum / NBR to engage more IT firms to develop VAT software
« on: February 26, 2020, 09:21:21 AM »
Currently, there have been only 11 firms, which are eligible for developing the software and approved by the NBR

The National Board of Revenue (NBR) is going to engage more IT firms in developing software for businesses to help them maintain accounts and keep records of value-added tax (VAT).

Currently, there have been only 11 firms, which are eligible for developing the software and approved by the NBR.

The revenue regulator took the initiative in a bid to expedite implementation new the Value Added Tax and Supplementary Duty Act, 2012

Speaking as chief guest at a workshop titled “Awareness Raising on Value Added Tax and Supplementary Duty Act-2012” NBR Chairman Mosharraf Hossain Bhuiyan came up with the announcement in the capital yesterday.     

“It is quite impossible to provide services for the huge number of businesses under VAT coverage with only 11 listed software developing companies,” Mosharraf Hossain Bhuiyan said.

Considering the number of businesses, the NBR decided to increase the number of companies to ensure quicker implementation of new VAT law, said the NBR chair.

The NBR would issue a circular within two or three days to add more companies to existing lists, he added.

As per the direction of the NBR, these companies will be allowed to develop software for businesses to help maintain accounts and keep digital records of VAT. The software will also connect the business firms with the NBR automatically.

Mosharraf urged the country’s eligible software companies to apply to be listed with the NBR for the job.

Earlier on February, the NBR authorized 11 companies —UY Systems, Ennova Technologies, Dhrupadi Techno Consortium, Symphony Softtech, UniSoft Systems, Mediasoft Data Systems, Best Business Bond, CSL Software Resources, Allied Information Technology, Jubosoft Information Systems and Divine IT — as eligible for the software development.

Businesses like medium firms or manufacturing companies with more than Tk5crore annual turnover were asked to use the software, said an NBR circular published last year.

However, the directive was not implemented then as the NBR delayed for authorizing the companies.

Meanwhile, as part of the ‘VAT and supplementary duty act 2012’ implementation, the revenue board on June 13 this year issued an order and mentioned the details about the software and the eligibility of the software producing companies.

Who can apply?

The recent order of the NBR mentioned four eligibilities for the aspirants who want to produce such software.

The aspirant company must have registration from Register of Joint Stock Companies and Firms Office as public or private limited company.

The company must have five-year experience of running the business uninterruptedly and must have experience of post-sale services.

Besides, the aspirant needs to have experience in accounting or similar software making, which has been successfully set up in at least three medium or large business firms.

Also, the company has to manage all for examining the software by the revenue board.

How will authorization be carried out?

Aspirant will apply to VAT Commissioner concerned. Then, he will initially check the software and send it to a NBR member, who is responsible for VAT implementation and IT. The member, after his observation, will send it to authorizing committee comprised of five members and headed by the convener, commissioner (VAT) of the large taxpayer unit. The committee will provide the final approval.

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