Understanding the Challenges of Maintaining VAT Compliance in the Pharmaceutical Industry of Bangladesh: A Phenomenological Study

Abstract

This study explores the challenges VAT executives face in maintaining VAT compliance within Bangladesh's pharmaceutical industry. Using a phenomenological approach, in-depth interviews were conducted with key VAT executives to understand their experiences. The hurdles that are found are then categorized based on similarities and themes. The findings reveal that external challenges, such as the complexity and fragmentation of VAT laws, frequent regulatory changes, inefficiencies in the National Board of Revenue's (NBR) digital infrastructure, and a shortage of expert VAT consultants, propose the most significant compliance difficulties. Additionally, sector-specific challenges, intricate input tax credit management, excessive documentation requirements, and the financial burden of acting as de facto agents of NBR further complicate compliance. On the other hand, internal factors like workforce capability and lack of inter-departmental coordination contribute to inefficiencies. Overall, external regulatory and systemic issues create the most significant obstacles. The study highlights the need for more transparent regulatory frameworks, improved technological support, and enhanced training programs to streamline VAT compliance in Bangladesh’s pharmaceutical industry. This research contributes to understanding the challenges created during the VAT compliance process from the context of pharmaceutical industries, specifically in Bangladesh. It is hoped that the findings will incite further interest in researchers about this topic, which will result in accurately identifying all the challenges.