When and why is a VAT agent required in Bangladesh?
A non-resident entity that conducts business in Bangladesh but does not have a fixed place of business must appoint a VAT Agent in Bangladesh, according to the Value Added Tax and Supplementary Duty Act, 2012, and the Value Added Tax and Supplementary Duty Rules, 2016, which take effect on July 1, 2017. The VAT Agent will be the person authorized to act on the Business entity’s behalf.
The VAT agent will be the person authorized to represent the non-resident to the VAT authorities.
How Will A VAT Agent Work in Bangladesh?
On behalf of the non-resident, the VAT Agent must obtain a VAT Agent certificate, which is typically valid for three years. The certificate can be renewed using an application before it expires.
After nominating a VAT agent, the non-resident must notify the National Board of Revenue, and the National Board of Revenue must contact the VAT agent to obtain his consent.
Such VAT Agent of a non-resident shall bear all responsibilities and carry out all activities of the non-resident, and shall be jointly and severally liable for the payment of all dues, including taxes, fines, penalties, and interest.
Nonetheless, a VAT Agent must register economic activities for VAT in the name of the principal.
VAT Agent in Bangladesh
Tahmidur Rahman Remura Wahid Associates law Firm is a group of professionals that includes Chartered Accountants registered with the Institute of Chartered Accountants of Bangladesh, Cost and Management Accountants registered with the Institute of Cost and Management Accountants of Bangladesh, and lawyers registered with the Bangladesh Bar Council.
Our professionals are qualified to act as VAT agents for non-resident entities in Bangladesh, and they have the necessary experience dealing with VAT authorities regarding VAT return submission, obtaining VAT exemption, input/output tax credit, VAT Audit, and VAT registration.
What exactly is VAT?
VAT, or Value Added Tax, is an indirect tax paid by the consumer through a registered person. VAT on a specific good or service is calculated by adding the actual level of value of the said good or service and adjusting the input tax payable against the supplied goods or service.
If a good is purchased for Taka 1000 and sold for Taka 1500, an amount of Taka 130.43 is included as VAT for the purchase of Taka 1000 (Calculation: 1000×15/115); similarly, a VAT amount of Taka 195.65 is included if the good is sold for Taka 1500. (Do the math: 1500×15/115.)
Actual addition will be Taka 500 if the goods is sold at Taka 1500 and as the seller had paid the price of the goods during purchase inclusive of the VAT, he will pay the VAT at the actual level of addition at the stage of sale, that is on Taka 500, taking back the VAT paid by him at the stage of purchase.
Payable VAT on Taka 1500- Taka 195.65
VAT included in Taka 1000- Taka 130.43
Net payable VAT on Taka 500- Taka 65.22 (Calculation: 500×15/115)
Method of calculation by seller- = (1500×15/115) – (1000×15/115)
=195.65-130.43
=65.22 Taka
How does the VAT procedure function?−
The VAT procedure functions through accepting input tax credit at every level of supply. The tax payer, in accordance with the law and relevant rules and through maintaining accounts during every tax period, accepts paid up VAT on purchased input or goods. The VAT chain is maintained through accepting credit at every level of supply and paying Value Added Tax on all value additions.
| Stage | Price on which Value Added Tax may be levied | Value Added Tax (Rate of Tax-15%) | Credit | Net VAT | Addition |
|---|---|---|---|---|---|
| Import/ input accumulation stage Supposedly, price at Import/ input accumulation stage- 1000/- | 1000/- | 130.43/- | 0/- | 130.43/- | 1000/- |
| Output stage Supposedly, sale price by the producer at output stage- 1500/- | 1500/- | 195.65/- | 130.43/- | 65.22/- | 500/- |
| Wholesale stage Supposedly, sale price by the seller at wholesale stage- 2000/- | 2000/- | 260.87/- | 195.65/- | 65.22/- | 500/- |
| Retail stage Supposedly, sale price at retail stage- 2500/- | 2500/- | 326.09/- | 260.87/- | 65.22/- | 500/- |
| Tax paid by the consumer (on final price- 2500/-) | 326.09/- |
What are the Forms concerned with Registration or Enlistment?−
The Forms concerned with Registration or Enlistment are as follows:
| Sl No | Description | Form No |
|---|---|---|
| 1 | Central registration / enlistment | 2.1 |
| 2 | Branch registration | 2.2 |
| 3 | Value Added Tax registration certificate / Turnover tax enlistment certificate | 2.3 |
| 4 | Value Added Tax registration / Turnover tax enlistment revocation and application for alteration of tax-nature. | 2.4 |
| 5 | Value Added Tax registration / Turnover tax enlistment revocation- final return. | 2.56Post registration / enlistment information alteration or addition of new information- intimation to the Commissioner2.67Application for transfer of place of business concern2.7 |
What are the differences between provisions in the old and the new law in respect of The Value Added Tax and Supplementary Duty Act 2012 and The Value Added Tax Act 1991?
The differences between provisions in the old and the new law in respect of registration and enlistment are as follows:
| The Value Added Tax Act 1991The Value Added Tax and Supplementary Duty Act 2012Geographic location is the primary reason for registration or enlistment. If a company has more than one branch unit, more than one registration is usually required. Artificial supply must be created during the transfer of input or produced goods from one branch of a business concern to another, as tax must be paid showing supply. An institution with more than one registration, each unit is treated as a separate individual, and each branch is required to maintain separate accounts, including VAT payment, as well as separate audits. A BIN with 11 digits would be issued, from which the Commissionerate and Circle could be deduced. The BIN is changed immediately following a change in the address of the business concern. Many different types of documents were required for registration. The departmental office issued registration or enlistment. | The method of accounting for the institution serves as the primary basis for registration or enlistment. Even if a company has multiple branch offices, a single registration is usually sufficient. Artificial supply does not need to be created during the transfer of input or produced goods from one branch of a business concern to another, as this is not considered supply. An institution with a single registration for more than one branch unit is not considered a separate individual, and each branch is not required to maintain separate accounts, including VAT payment, but must instead maintain accounts for the concerned branch only. A BIN with 9 digits is issued by which Commissionerate, Circle cannot be determined. Even if the business’s address changes, the BIN remains unchanged. There are no documents required for registration. The Commissionerate Office issues registration or enlistment documents. |
What is the online application procedure?
You can apply for online registration using the following methods:
Step 1: Go to www.nbr.gov.bd .
Select the option for Online VAT Registration. You have arrived at the VAT Online Portal.
Step 2: First, create a User ID and Password in the name of the person who will be registered or enlisted.
Step 3: Log in to the VAT Online System with your User ID and Password and, after selecting the Registration option, submit the completed VAT-2.1 Form.
Step 4: If the submission is valid, a VAT Registration Certificate or Turnover Tax Enlistment Certificate will be issued. That will be provided by the System. This will also be sent to your email address.
NB: Before submitting any online application, please read the relevant practical guide from the NBR’s website. Furthermore, you can train yourself from www.nbrelearning.gov.bd to learn more in depth, including by watching relevant video films.
Are you intending to do your corporate/personal taxes in Bangladesh (Tax rate in Bangladesh)?
Get your tax and vat sorted out (a/c current Tax rate in Bangladesh) with the help of Tahmidur Rahman Remura: TRW: The Law Firm in Bangladesh:
The legal team of Tahmidur Rahman, The Law Firm in Bangladesh: TRW, The Law Firm in Bangladesh are highly experienced in providing all kinds of services related in doing taxes as per the current Tax rate in Bangladesh. For queries or legal assistance, please reach us at:
E-mail: info@trfirm.com
Phone: +8801847220062 or +8801779127165
Address: House 410, Road 29, Mohakhali DOHS