In Bangladesh, the scope of work related to Value Added Tax (VAT) is governed by the VAT and Supplementary Duty Act, 2012, which outlines the procedures and responsibilities for businesses operating under the VAT system. The VAT system in Bangladesh is implemented by the National Board of Revenue (NBR).

Here’s an overview VAT in Bangladesh:

1. VAT Registration:

• • Businesses whose taxable turnover exceeds a prescribed threshold must register for VAT with the NBR.
  • VAT registration is mandatory for businesses involved in the supply of goods and services.
  • The registration process involves applying to the local VAT office and providing necessary documentation.

2. VAT Collection and Payment:

• • Registered businesses must collect VAT on the sale of goods and services.
  • The VAT rate in Bangladesh typically ranges from  5%, 7.5%, 10%, 15% for goods and services, with certain goods and services exempt or subject to lower rates (like 0%).
  • VAT should be paid monthly depending on the size of the business, via the VAT returns (Form VAT-9.1) submitted to the VAT authorities.

3. Input VAT and Output VAT:

• • Businesses can claim VAT on the goods and services purchased (Input VAT) and use this to offset the VAT they collect on sales (Output VAT).
  • The difference between the output VAT and input VAT is paid to the government.
  • If the input VAT exceeds the output VAT, businesses can apply for a refund from the NBR.

4. Invoicing Requirements:

• • Businesses must issue VAT invoices for taxable sales, which must include specific details such as:
    • Name and address of the seller and buyer
    • Description of goods or services
    • VAT rate and amount charged
    • VAT registration number of the seller
    • Date of invoice
  • VAT invoices are essential for businesses to claim input VAT.

5. VAT Returns and Filing:

• • Businesses are required to file VAT returns monthly or quarterly, depending on their turnover.
  • The return must include detailed information on the sales, purchases, VAT collected, and VAT paid.
  • Non-compliance or delays in filing VAT returns may result in penalties.

6. Exemptions and Zero-Rating:

• • Certain goods and services may be exempt from VAT (e.g., certain healthcare, education, and financial services).
  • Some goods and services may be zero-rated, meaning they are taxed at 0% VAT but still qualify for input tax credits. This is often used in export goods or services.

7. VAT Audits and Inspections:

• • The NBR has the authority to audit VAT returns and inspect the records of registered businesses.
  • Businesses are required to maintain proper records of transactions and accounts to support their VAT filings.
  • In case of non-compliance or discrepancies, businesses may face penalties, interest, or even legal actions.

8. Supplementary Duty (SD):

• • Certain luxury goods and services may be subject to an additional Supplementary Duty (SD), which is distinct from VAT but often applied alongside VAT on certain high-value items.
  • The rates of supplementary duties vary depending on the item, and the duty is collected in addition to VAT.

9. VAT on Imports:

• • VAT is levied on the import of goods into Bangladesh.
  • The customs authority collects the VAT at the time of importation, along with customs duties.

10. Penalties for Non-Compliance:

• • Late payment of VAT, failure to register for VAT, failure to issue proper VAT invoices, or incorrect VAT returns can result in significant penalties.
  • Penalties can include fines, interest, and in some cases, prosecution.

11. VAT Refunds:

• • If the business is entitled to a refund (i.e., when input VAT exceeds output VAT), they can apply for a refund from the NBR.
  • The NBR reviews refund claims and processes them as per the established rules, but delays in refunds are a common concern for businesses.

12. VAT on Services:

• • Services, similar to goods, are subject to VAT in Bangladesh, unless specifically exempt.
  • Service providers must charge VAT on their services and comply with the same filing and payment requirements as those for goods.

This is a basic framework of the VAT system in Bangladesh. Specific industries and sectors might have additional or specialized VAT-related rules and exemptions. Businesses entity can consult with Rahman Consultancy Firm  to ensure the compliance  with VAT requirements.

VAT Services in a nut-shell:

VAT consultancy in Bangladesh typically involves helping businesses navigate the country’s Value Added Tax system. VAT is a consumption tax placed on goods and services at various stages of production and distribution, and businesses must comply with local tax regulations. Rahman Consultancy Firm would offer various services, such as:

1. VAT Registration: Assisting businesses with registering for VAT with the National Board of Revenue (NBR) if they meet the criteria.
2. VAT Return Filing and Reporting: Helping businesses file VAT returns and ensuring they comply with the deadlines and requirements set by the NBR.
3. VAT Planning and Advice: Offering strategic advice on VAT implications for business transactions, helping minimize tax liabilities and avoid errors.
4. Audit and Compliance: Ensuring that businesses’ VAT records and returns are in compliance with the law, and assisting during tax audits.
5. Handling VAT Disputes: Providing legal and technical support in case of any disputes with the tax authorities.
6. Training: Offering training sessions for businesses to understand VAT regulations and processes.
7. Import/Export VAT Assistance: Advising businesses involved in international trade on the VAT implications of imports and exports.

If you’re looking to find a VAT consultant in Bangladesh then Rahman Consultancy Firm have a dedicated teams for VAT services.

📞 Contact us today for a consultation!