INTRODUCTION

CHPTER 1

1
Introduction: Value Added Tax or VAT in Bangladesh is an indirect consumption tax
which is paid by consumer or buyer. VAT is imposed at each stage of production-supply
chain based on the value added to the product at that stage. The end consumer ultimately
pays the VAT.

The National Board of Revenue (NBR), under the leadership of Shah Abdul Hannan
introduced VAT in Bangladesh 1991. National Board of Revenue, being the central
authority for tax administration in Bangladesh, monitors and regulates VAT collection
according to the Value Added Tax Law, 1991. The VAT collected from people are used by
the Government of Bangladesh in Development activities of the country. Current standard
rate of Value Added Tax in Bangladesh is 15% of the goods or service price. Other than
this rate there are some truncated value based preferential rates on some services. At
present the following preferential rates are applicable by Statutory Rules and Order 1.5%,
2%, 3%, 4%, 4.5%, 5%, 5.5%, 6% and 9%.

1.2 Rationale of Study: The main reason of this study is for familiar with the practical
knowledge about the Value Added Tax Management which followed by Square
Pharmaceutical Limited (SPL). To SQUARE, Accounts & Finance is the key to all
success and for Accounts & Finance VAT management is very important to know.
Because SPL is a manufacturing organization. They need to pay VAT when the purchase
raw materials from abroad and domestic, take any service which not VAT exemptible and
they collect VAT on their sales. There are many rules & regulation need to follow for VAT
management. To know the VAT management I have little knowledge about the export
import process of SPL. And I also know their import position and some countries from
where they import their raw materials.

1.3 Objective of the Study: Our internship program has been launched basically to
bridge the gap which will fulfill the experience through theoretically as well as
practically.

2
1.3.1 Broad Objective: The primary objective of this report is to get an overview of the
Value Added Tax Management of Square Pharmaceuticals Limited and the relevant acts,
rules and laws applied in VAT.

1.3.2 Specific Objective:

To be honest, the objective of the study is to fulfil the requirement of MBA program.
Other objectives behind conducting this study are as follows:
To be familiar with the corporate environment.
To know briefly about the VAT policy of the Square Pharmaceuticals Ltd.
To know how the Accounts & Finance Department of Square Pharmaceuticals
Ltd. maintains its VAT Current Account.
To know about the procedures of VAT system of an import and export oriented
business.
To understand the flow of documents related to the VAT in SPL.
To get an exposure to the real world situation.

1.4: Scope of the Study: Value Added Tax (VAT) Management of manufacturing public
limited company is a broad area. Within the time period of three months allotted for
internship, it is virtually impossible to cover all aspects of VAT Management. So, the
scope of my report is limited only to the compliance of those as followed by Square
Pharmaceutical Ltd. In preparing the report, I review and analyze the information
published in the annual reports for the year 2011 2016, different records, papers, and
documents regarding VAT with the assistance of assigned employees of SPL.

1.5 Methodology:

This report has been prepared on the basis of experience gathered during the period of
internship. For preparing this report, I have also got information from annual reports,
documents from office desk/archive and website of the Square Pharmaceutical Limited.
The details of the work plan are furnished below:

3
1.5.1 Data collection method: Relevant data for this report has been
collected primarily by direct investigations of different records, papers,
and documents. The interviews were administered by formal and informal
discussion and no structured questionnaire has been used.

1.5.2 Sources of Data Collection: The data and information for this report have
been collected from both the primary and secondary sources. The details about sources of
data collection are mentioned below:

Primary sources: Primary sources of information are those that provide first-hand
accounts of the events, practices or conditions. In general, these are documents that
were created by the witnesses or first recorders of these events at about the time they
occurred. These information are collected from:
Practical desk work
Face to face conversation with the respective stuffs of the corporate headquarters
Direct observations

Secondary Sources: Second-hand, published accounts are called secondary sources.

They are called secondary sources because they are created after primary sources and
they often use or talk about primary sources. Secondary sources can give additional
opinions on a past event or on a primary source. Secondary sources often have many
copies which I collected from:
Annual report of companies
Files & Folders
Daily diary
Various publications of companies
Website

1.5.3 Data processing: Data collected from primary and secondary sources have been
processed manually and qualitative approach in general and quantitative approach in
some cases has been used throughout the study.

4
1.5.4 Data analysis and interpretation: Qualitative approach has been adopted for data
analysis and interpretation taking the processed data as the base. So the report relies
primarily on an analytical judgment and critical reasoning.

1.6 Limitation of the study: In spite of having heartfelt effort, there were some
limitations, which acted as a barrier to prepare report. Although I have tried to make the
report informative and relevant to the given topic, I faced some limitations.

All the comments made, conclusions reached and suggestions for possible
improvement provided are purely based on my level of understanding, knowledge
and my way of interpreting a particular statement.
Data availability is another is big issue here because Account & Finance
Department is a very restricted area so company does not want to disclose all the
confidential information regarding VAT management.
Because of the lack of information, I have to make some assumptions that may
cause few errors or personal mistakes in the report.
To continue study in such a vast are requires a big deal in time. Report making
after the job period was tough to furnish the big report.

5
SQUARE PHARMA AT A
GLANCE

CHAPTER 2

6
SQUARE today symbolizes a name a state of mind. But its journey to the growth and
prosperity has been no bed of roses. From the inception in 1958, it has today burgeoned
into one of the top line conglomerates in Bangladesh. Square Pharmaceuticals Ltd., the
flagship company, is holding the strong leadership position in the pharmaceutical industry
of Bangladesh since 1985 and is now on its way to becoming a high performance global
player.

SQUARE Pharmaceuticals Limited is the largest pharmaceutical company in Bangladesh

and it has been continuously in the 1st position among all national and multinational
companies since 1985. It was established in 1958, converted into a public limited
company in 1991 and listed with stock exchanges in 1995. The turnover of Square
Pharma was Taka 30.28 Billion (US$ 385.22 million) with about 18.64% market share
having a growth rate of about 25.36% (April 2014 March 2015).

Looking beyond the horizon

SQUARE Pharmaceuticals Limited has extended its range of services towards the
highway of global market. It pioneered exports of medicines from Bangladesh in 1987
and has been exporting antibiotics and other pharmaceutical products. Present export
market covers 36 countries. This extension in business and services has manifested the
credibility of Square Pharmaceuticals Limited.

7
Founder Chairman's Profile:

Mr. Samson H Chowdhury was born on 25 September, 1925.

After completing education in India he returned to the then
East Pakistan and settled at Ataikula village in Pabna district
where his father was working as a Medical Officer in an
outdoor dispensary. In 1952, he started a small pharmacy in
Ataikula village which is about 160 km off capital Dhaka in the
north-west part of Bangladesh. Mr. Samson H Chowdhury then
ventured into a partnership pharmaceutical company with three
of his friends in 1958. When asked why the name SQUARE
was chosen he remembers -Mr.
"We named
Samson it SQUARE because it was started by four
H Chowdhury
friends and also because it signifies accuracy and perfection meaning quality" as they
committed in manufacturing quality products. Now that small company of 1958 is a
publicly listed diversified group of companies employing more than 28,000 people. The
current yearly group turnover is 616 million USD.

Vision: We view business as a means to the material and social wellbeing of the
investors, employees and the society at large, leading to accretion of wealth through
financial and moral gains as a part of the process of the human civilization.

Mission: Our Mission is to produce and provide quality & innovative healthcare relief for
people, maintain stringently ethical standard in business operation also ensuring benefit to
the shareholders, stakeholders and the society at large.

Objectives: Our objectives are to conduct transparent business operation based on market
mechanism within the legal & social framework with aims to attain the mission reflected
by our vision.

8
 Department of Square Pharmaceuticals Limited:

Human Resource Department

Accounts & Finance Department

Supply Chain Management

Technical Service Department

Product Management Department

General Service Management

Company Affairs

Distribution Department

Sales Department

Production Department Managing Director

Engineering Department Director

General Manager
nager

Deputy General Manager ManagerManagerGGggggGGGGGGeneMMmmmmMMMMmmmManager

Organizational Hierarchy:
Assistant General Manager
Chairman

Senior Manager

Manager

Senior Executive

Executive

Officer
9
Junior Officer
Corporate History & Growth:

1958 : Debut of SQUARE Pharma as a Partnership Firm.

1964 : Converted into a Private Limited Company.

1974 : Technical Collaboration with Janssen Pharmaceuticals, Belgium, a subsidiary of

Johnson and Johnson International, USA.

1982 : Licensing Agreement signed with F. Hoffman-La Roche & Co Ltd., Switzerland.

1985 : Achieved market-leadership in the pharmaceutical market of Bangladesh among

all national and multinational companies.

1987 : Pioneer in pharmaceutical export from Bangladesh.

1991 : Converted into a Public Limited Company

1994 : Initial Public Offering of shares of SQUARE Pharmaceuticals Ltd.

1995 : Chemical Division of SQUARE Pharmaceuticals Ltd. starts production of Active

Pharmaceutical Ingredients (API).

1997 : Won the National Export trophy for exporting pharmaceuticals.

1998 : Agro-chemicals & Veterinary Products division of SQUARE Pharmaceuticals

starts its operation.

2001 : US FDA/UK MCA standard new pharmaceutical factory goes into operation built
under the supervision of Bovis Lend Lease, UK.

2004 : SQUARE enlisted as UNICEF's global supplier.

2005 : New State-of-the-Art SQUARE Cephalosporins Ltd. goes into operation; built
under the supervision of TELSTAR S.A. of Spain as per US FDA/ UK MHRA
requirements.

2007 : SQUARE Pharmaceuticals Ltd., Dhaka Unit gets the UK MHRA approval.

10
2009 : Starts manufacturing of insulin maintaining quality standards of US FDA & UK
MHRA. Dedicated hormone & steroid products manufacturing facility complying with
the current Good Manufacturing Practice (cGMP) of WHO, US FDA & UK MHRA starts
operation.

2012 : SQUARE Pharmaceuticals Ltd., Dhaka Unit and SQUARE Cephalosporins Ltd.
get the Therapeutic Goods Administration(TGA) of Australia approval.

2015 : PAI (Pre Approval Inspection) by US FDA was successful for Dhaka Sites solid
dosage unit.

Corporate Social Responsibility:

Corporate Social Responsibility (CSR) is the continuing commitment by business to

behave ethically and contribute to economic development while improving the quality of
life of the workforce and their families as well as of the local community and society at
large.
Our Business Motivation is Being Good by Doing Well and to conduct transparent
business operations based on market mechanism within the legal, ethical & social
framework with aims to attain the mission reflected by our vision. We scale-up CSR
activities to consider the interests of our external & internal stakeholders like customers,
employees, vendors, shareholders, society, government etc. and ecological & ethical
considerations in all aspects of operations. SQUARE is one of the pioneer signatories of
United Nations Global Compact (UNGC) in Bangladesh. UNGC principles are aligned
with company's culture from the very outset.
SQUARE recognizes that progressive labour policies are good business practices,
especially for a company like us that has global ambition. We follow laws and encourage
work environment that welcomes diversity and also follow non-discrimination & fair
treatment policy both in the recruitment & selection process and performance
management system. We have Trade Union & our HR policies have been continuously
up-to-dated as per existing labour law of the country. We do not allow any female
employees during night shift operations & we strictly prohibit any form of forced labour.
We actively pursue the policy of No child labour in SQUARE.

11
Transparency & business ethics is the core value of SQUARE and it is strictly followed at
every step of the business processes. Every business in SQUARE is modeled in a way
that enables the management to ensure highest degree of both financial and behavioral
accountability. SQUARE pursues Zero Tolerance policy against all kinds of corruption.
SQUARE's activity goes well beyond the sphere of business. As socially conscious and
responsible corporate body SQUARE is committed to the improvement of the society as a
whole. Meril-Prothom Alo festival sponsored by SQUARE, has become a national
calendar event. SQUARE helps many NGO's in their effort to make available healthcare
to the disadvantage population of the country. It sponsors programs to build awareness on
the healthcare need. SQUARE is also a major sponsor of sporting events in the country.

SQUARE is proud to be a Bangladeshi Company actively involved in various field of

Corporate Social Responsibility.

Square Sister Concerns:

Square Hospitals Ltd.

Square Food and Beverage Ltd. Square Herbal & Nutraceuticals Ltd Square Toiletries Ltd.

Square Informatix Ltd. Maasranga Productions Ltd. Square Textiles Ltd.

12
 Maasranga Communications
Square Fashions Ltd. Sabazpur Tea Company Ltd.
Ltd

Mediacom Limited SQUARE College of Nursing Aegis Services Ltd.

Corporate Brief:

Company Name : Square Pharmaceuticals Limited

Year of Establishment : 1958 (as a Partnership Firm)

Date of Incorporation : 10-11-1964 (as a Private Limited Company)

Incorporation Number : 2252/EP-68

Country of Incorporation : Bangladesh

Converted into Public Limited : 01-01-1990

Present Status : Public Listed Company

Stock Exchange Listing : Dhaka and Chittagong Stock Exchange

Trade Code : SQURPHARMA

Business Lines : Manufacturing and Marketing of

Pharmaceuticals Finished Products, Basic
Chemicals, AgroVet, Pesticide, Small Volume

13
 Parental Opthalmic and Insulin Products.

Board of Directors : Mr. Samuel S Chowdhury, Chairman

Mrs. Ratna Patra, Vice Chairman
Mr. Tapan Chowdhury, Managing Director
Mr. Anjan Chowdhury, Director
Mr. Kazi Iqbal Harun, Director
Mr. M Sekander Ali, Independent Director
Mrs. Nihad Kabir, Independent Director

CFO : Mr. Md. Kabir Reza, FCMA

Company Secretary : Mr. Khandaker Habibuzzaman, FCS

Authorized Capital : BDT 10,000 million

Paid-up Capital : BDT 6,235 million

Face Value of Share : BDT 10.00 each

Owners Composition : Sponsors 36.34 %

General Public 35.93 %
Foreigners 15.39 %
Institutions 12.34 %

Members (Shareholders) : Around 63,000

Employees : 7,174

Statutory Auditors : M/s Ahmed Zaker & Co. Chartered Accountant

Subsidiary Company : Square Formulations Limited

Associate Company : Square Textiles Limited (Listed)

Square Fashions Limited
Square Hospitals Limited

Corporate Headquarter & : Square Centre, 48 Mohakhali C.A.

Registered Address Dhaka, Bangladesh

Factory, Pabna Unit : Square Road, Salgaria, Pabna, Bangladesh

Factory, Dhaka Unit : Board Ghar Bazar, Kaliakoir, Gazipur,

14
 Bangladesh

Investors Relation Department : Email : cs@squaregroup.com

Email, Phone & Fax Phone : 880-2-8833047 Ex-229, 585
Fax : 880-2-8828768

15