Five of the eight countries that form part of the South Asian Association for Regional Conference (SAARC), i.e. Bangladesh, India, Nepal, Pakistan and Sri Lanka, levy VAT, whereas the remaining three, Afghanistan, Bhutan and Maldives, have not yet introduced this tax. The author describes the evolution and the existing structure of VAT in those countries which levy VAT and the pros and cons of the introduction of VAT in the other SAARC countries.