Tax and Vat: Annual charge levied on both earned income ( wages , salaries , commission ) and unearned income ( dividends , interest , rents ). In addition to financing a government’s operations, progressive income taxation is designed to distribute wealth more evenly in a population , and to serve as automatic fiscal stabilizer to cushion the effects of economic cycles . Its two basic types are (1) Personal income tax , levied on incomes of individuals , households , partnerships , and sole-proprietorships ; and (2) Corporation income tax , levied on profits ( net earnings ) of incorporated firms.

A value-added tax (VAT) or goods and services tax (GST) is a popular way of implementing a consumption tax Bangladesh and many other countries. It differs from the sales tax in that taxes are applied to the difference between the seller-purchased price and the resale price. This is accomplished by taking full tax on all sales, but refunding the tax difference to the sellers.

The VAT is an alternative to a sales tax and is meant to deal with a specific problem. While with a sales tax, a business selling goods is responsible for making a subjective decision about the intent of a buyer, the business may not be fully competent to make the decision.