Bangladesh VAT System Explained – Complete Guide

VAT in Bangladesh

The Value-Added Tax (VAT) in Bangladesh is a broad-based consumption tax applied on the supply of goods and services, as well as imported goods. VAT is governed by the Value Added Tax and Supplementary Duty Act, 2012 and is administered by the National Board of Revenue (NBR).

VAT is charged at each stage of the supply chain, but the final consumer bears the cost. Businesses collect VAT on behalf of the government and can claim credits on input VAT.

📊 VAT Rates in Bangladesh

Bangladesh has a multi-rate VAT system, depending on the type of goods/services and business structure:

🔹 Standard Rate: 15%

Applied to most goods and services unless exempted or under special rate schedules.

🔸 Truncated/Reduced Rates: 5%, 7.5%, 10%

Used for specific sectors like construction, transport, hotel, restaurant services, etc.

🟢 Zero Rate (0%)

Applies to exports of goods and services.

🚫 VAT Exempt

Certain basic services like education, healthcare, and agricultural products.

🏢 Who Needs to Register for VAT in Bangladesh?

✅ Mandatory VAT Registration:

Businesses are required to register for VAT if:

Annual turnover exceeds BDT 30 lakh (BDT 3 million)

They are engaged in import, export, or manufacturing

They are a service provider under certain regulated sectors

📝 Types of VAT Registration:

BIN (Business Identification Number) for standard VAT payers

Turnover Tax registration for small businesses under BDT 3 million (not allowed to charge VAT)

🌍 Foreign Service Providers:

Foreign companies supplying digital services (e.g., software, streaming, ads) to Bangladeshi consumers are required to register for VAT and comply with local regulations.

🔢 VAT Number Format in Bangladesh

The VAT number in Bangladesh is known as a BIN (Business Identification Number).

Format Example: XXXXXXXXXXXX (12-digit number)

It must be displayed on all invoices, documents, and VAT filings.

🧾 VAT Invoice Rules in Bangladesh

VAT-registered entities must issue VAT invoices or Challan for every sale. These documents must include:

• Supplier and buyer name, address, and BIN
• Invoice number and date
• Description and quantity of goods or services
• Unit price and total price
• Applicable VAT rate and amount
• Total payable amount including VAT

Since 2019, Bangladesh introduced an Electronic Fiscal Device (EFD) system to improve compliance, especially in retail and service sectors.

🧮 VAT Calculation Example

Example:

A retailer sells electronics worth BDT 100,000 (exclusive of VAT)

• VAT @15% = BDT 15,000
• Total payable = BDT 115,000
• VAT collected is paid to NBR after deducting input VAT (if any)

📅 VAT Return Filing & Payment

🗓️ Filing Frequency:

VAT returns are filed monthly using Mushak-9.1 form

⏰ Deadline:

Returns must be submitted by the 15th day of the following month

💻 Filing System:

All VAT returns must be filed online via the VAT Online System (VOS):

🔗 https://vat.gov.bd

Payments can be made electronically or through designated banks.

🌍 VAT on Imports & Exports

📥 Imports:

• All imports are subject to 15% VAT (unless exempt)
• Collected at the time of customs clearance

📤 Exports:

• Exported goods and eligible services are zero-rated (0%)
• Exporters must maintain proper documents (export declaration, shipping bill, bank realization certificate)

📡 VAT on Digital & Electronic Services

Foreign digital service providers must now:

• 📌 Register for VAT with NBR
• 📩 File monthly VAT returns

💳 Collect and remit 15% VAT on services such as:

• Online advertising (Google, Meta)
• Streaming platforms (Netflix, YouTube Premium)
• Software-as-a-service (SaaS)
• Cloud storage, apps, gaming, and e-learning platforms

🚫 VAT Exemptions in Bangladesh

Common VAT-exempt sectors include:

• Basic food/agricultural products
• Education and healthcare services
• Public transport
• Books and printed newspapers
• Banking and financial services
• Electricity and water supply

Businesses engaged only in exempt supplies cannot claim input VAT credits.

✅ VAT Compliance Checklist for Bangladesh

• ✔️ Obtain BIN from NBR for VAT registration
• ✔️ File Mushak-9.1 monthly VAT returns online
• ✔️ Maintain VAT invoices and records
• ✔️ Install Electronic Fiscal Device (if applicable)
• ✔️ Use proper VAT rates depending on your sector
• ✔️ Claim input VAT credit only against taxable supplies
• ✔️ Comply with NBR audit and inspection requirements

Bangladesh's VAT system reflects the country’s push towards greater tax transparency and digital compliance. Whether you're a local manufacturer or a foreign digital provider, understanding VAT obligations is crucial to avoid penalties and ensure smooth operations.

👉 Visit GSTCal.org to use our free Bangladesh VAT Calculator for accurate and instant tax computation.