VAT registration and enlistment in Bangladesh
Every company in the country must have a unique Business Identification Number (BIN). A business must first obtain a VAT registration certificate before applying for a BIN.
The annual turnover of a business determines whether it is required to pay VAT. If a company’s annual turnover is less than 30 lakhs taka, it is not required to pay VAT; however, if the company’s annual turnover is between 30 lakhs 1 taka and 80 lakhs taka, it is required to pay 3% Turnover Tax. All other businesses with an annual turnover of more than 80 lakhs must pay VAT at the 15% rate.
To continue your normal business operations, such as tendering, banking, and export and import, you must apply for VAT registration and obtain a Business Identification Number (BIN).
Obtaining VAT Registration
Applying for VAT registration is free, but you must meet certain requirements to be eligible. To support your application, you must provide the necessary information. This will also help to reduce any potential delays in processing your request.
A BIN is not available to everyone. Although anyone can apply for free, only those who are eligible will receive and keep a BIN.
What you will require for your BIN application
Certain information is required to complete your free BIN application.
Request a BIN
To obtain a BIN, you must be running a business.
Following the application for BIN
If your BIN application is approved, your information is saved in the IVAS (Integrated VAT Administration System) at NBR. If your application is denied, you still have options.
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/-
Supposedly, sale price by the producer at output stage- 1500/-
|Wholesale stage |
Supposedly, sale price by the seller at wholesale stage- 2000/-
|Retail stage |
Supposedly, sale price at retail stage- 2500/-
|Tax paid by the consumer|
(on final price- 2500/-)
How is VAT levied?
VAT is levied on taxable imports and supplies. VAT will be levied at a rate of 15% on all imports and supplies, except for goods and services exempt from VAT under the provisions of the law’s First Schedule.
Who is responsible for VAT?
The VAT procedure is an automatic taxing procedure based on input tax credit against supply or sale. The supplier accepts the paid-up VAT on the purchase tax of the goods or service as credit against the VAT included in the price during the supply of such goods or service, and he pays the net amount of VAT. As a result, the seller realizes the VAT from the buyer’s price and deposits the net amount of VAT to the government treasury after taking credit for VAT at the purchase level.
Because VAT is a consumer tax, the consumer must pay the full amount of VAT that applies to goods or services. As an intermediary procedure, at all levels of sale, the producer, supplier, and all shall realize VAT on behalf of the government and deposit it in the government treasury.
When was VAT implemented in Bangladesh?
Bangladesh implemented the Value Added Tax on July 1, 1991. The new VAT legislation will go into effect on July 1, 2017.
Who is the VAT payer?
In the Value Added Tax procedure, the VAT payer is the final consumer of goods or services. At each level of sale, the supplier or seller collects VAT from the purchaser and deposits it in the government treasury. Because the consumer is the last among purchasers, the ultimate liability for VAT falls to the consumer. Only at the point of sale does the supplier or seller deposit the VAT realized to the government treasury.
What are the most recent VAT rates under VAT Procedure 1991?
The standard rate of VAT under the VAT Procedure 1991 is 15%. According to the budget for the previous fiscal year (2015-16), in addition to the standard rate, ten lower rates are in place in the case of some services, namely 1.5%, 2%, 2.5%, 4%, 5%, 5.5%, 6%, 7.5%, 9%, and 10%.
What is the registration threshold for VAT and Turnover Tax?
Under the new VAT procedure, the registration threshold is Taka 8 million, and the enlistment threshold is Taka 3 million.
How will I persuade my business that VAT will be applicable?
If any of the goods or services listed in the First Schedule of the law fall within the scope of your economic activities, no VAT obligation will arise in your business, according to the law.
Furthermore, the annual turnover of your company will determine the applicability of VAT in the business. (See also Question 2.2.) However, you can pay VAT after VAT registration regardless of your business’s annual turnover.
What exactly is tax under the new VAT law?
The new VAT law defines tax as VAT, turnover tax, and supplementary duty, as well as interest, fine, and pecuniary penalty to recover arrears.
What is a VAT consumer’s responsibility?
It is the consumer’s responsibility to take delivery of the purchase invoice from the seller at the time of purchase. Because taking proper delivery of the VAT invoice ensures proper deposit of the VAT included in this invoice to the Government treasury.
What can a buyer do if the seller refuses to issue a VAT invoice?
While it is the seller’s responsibility to issue VAT invoices, it is also the purchaser’s responsibility to properly take delivery of the VAT invoice. If the seller refuses to issue a VAT invoice for any reason, he will notify the seller of this responsibility, because proper delivery of the VAT invoice will ensure proper deposit of the VAT included in the invoice to the Government treasury.
Even if the seller does not wish to issue the VAT invoice, he may bring the matter to the attention of the VAT authority, either online or by informing the nearest VAT authority.
What exactly is registration or enlistment?
Any importer, exporter, or taxable supplier must participate in the VAT procedure under the Value Added Tax procedure. This involvement with the VAT procedure occurs through registration or enlistment. He must comply with the VAT law by obtaining a Business Identification Number in the manner prescribed by the VAT law. And, according to VAT law, obtaining a Business Identification Number in the prescribed manner is referred to as registration or enlistment.
When must I take Registration or Enlistment?
When the turnover of economic activities exceeds Taka 8 million in a 12 (twelve) month period, registration is required, and enlistment is required when the turnover of economic activities exceeds Taka 3 million in a 12 (twelve) month period. You must register or enlist within 15 (fifteen) days of becoming eligible for registration or enlistment. Registration or enlistment will take effect on the first of the month following.
What is the meaning of a Business Identification Number (BIN)?
A business identification number is a number assigned to an individual based on the value of his economic activities. The nature and activities of the individual’s economic activities cannot be determined by this identification number. A tax payer can be identified by a specific number of 9 digits. This number can be obtained from the NBR’s website to determine a tax payer’s state of business affairs.
How do I obtain a BIN?
If the annual turnover of my economic activities exceeds the prescribed limit, an application in Form- VAT 2.1 must be submitted to the Commissioner. Within three working days of proper scrutiny and examination, a Registration Certificate/ Turnover Tax Enlistment Certificate in Form- VAT 2.1 containing a BIN from the VAT system will be issued in my favor.
What exactly is a VAT Certificate of Honour?
VAT Certificate of Honour is a letter of recognition issued by the VAT Online System to a tax payer in VAT Form-18.5 after he submits VAT or Turnover Tax returns for all Tax Periods during the relevant one year.
What are the benefits of a Certificate of Honour?
Any individual may benefit from the following benefits by obtaining a Certificate of Honour under VAT law, for example:
- Import Registration Certificate and Export Registration Certificate Renewal
- Providing to a Withholding Entity
- Taking part in any tender.
- Enrolling in any organization.
- Bond Licence Renewal
- Bank loan sanction/renewal
- Registration of real estate, etc.
- Furthermore, under the Taxpayer Motivation Programme, various social benefits, such as- Discounts in various hospitals, hotels, restaurants, super markets, branded stores, air tickets, and so on; and Priority in having various services, etc.
How should I calculate Annual Turnover in my business?
You will calculate annual Turnover in your business by adding the total amount of money received from goods manufactured at, imported to, or purchased by your business concern during the previous 12 (twelve) months.
Method of calculating annual business turnover in the event of registration:
In the case of a business, calculate turnover over the last 12 months beginning on the last day of the previous month (tax period).
Assuming that January 2017 is the current month, turnover should be calculated from 31 December 2016, the last day of the preceding month, for a period of the last 12 months, i.e., from 1 January 2016 to 31 December 2016.
In the case of a new business:
(a) estimating net turnover for the next 12 months beginning on the first day of the preceding month based on actual turnover (tax period).
That is, in order to register my entirely new business, I will compute the net turnover for the next 12 months beginning on the first day of the previous month.
Assume you are going to start a new business in the month of January 2017. At this point, calculating from the first day of the preceding month, 1 December 2016, turnover should be determined for the next 12 months, i.e., from 1 December 2016 to 30 November 2017.
(b) on the basis of estimated turnover, if the person liable to be registered expects to cross the registration threshold, estimating net turnover for the next 12 months beginning on the first day of the month (tax period) in which he will examine the probability of his registration, he must obtain VAT registration.
What are the advantages of having a BIN?
A businessman’s legal validity of business is established through the BIN. You can avail the following advantages:
- All import- export activities except baggage import.
- Registration of land or building in the name of the person registered or enlisted.
Obtaining Import Registration Certificate or Export Registration Certificate.
Supplying to any Withholding Entity.
- Participating in any tender.
- Enlisting with any organization.
- Obtaining Bond Licence.
- Sanction of Bank loan in favour of a registered or enlisted person.
Where to submit application for registration or enlistment?−
Application for registration or enlistment shall have to be submitted at the following places:
- Web Portal of Online Board.
- Central Information Processing Centre run by the Board.
- Any Customs, Excise and VAT Commissionerate or Departmental Office, which may be
convenient for the applicant.
- Any service centre specified by the Board or the concerned Commissioner.
- Any fair conducted by the Board or the concerned Commissioner.
- Any other place ordered by the Board or the concerned Commissioner.
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|
|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.||2.5|
|6||Post registration / enlistment information alteration or addition of new information- intimation to the Commissioner||2.6|
|7||Application for transfer of place of business concern||2.7|
How do I get registered or enrolled?
You must apply to the concerned commissioner for registration or enlistment using form VAT 2.1 for registration or enlistment.
Following verification of documents and information, the commissioner shall enlist or register you within 3 (three) working days and issue you a Business Identification Number in accordance with VAT 2.3. The registration certificate can be obtained online or in hard copy from the VAT Online help center.
My company has several branches. I’ve been running a business and should I be obtaining separate BINs for each of the branches?
According to Section 5 of the Value Added Tax and Supplementary Duty Act of 2012, there is no need for separate registration for each branch of the same company; business operations can be managed with a single registration.
Is it possible for the Commissioner to register or enlist me on his own?
If the Commissioner determines that you are eligible for registration after proper verification, he may register or enlist you on his own.
Is it necessary to obtain registration or enlistment for economic activities that are exempt under the purview of…
Exempted economic activities do not necessitate registration or enlistment.
Can I obtain voluntary registration even if I operate a business in an exempted economic zone?
You certainly can.
How can I change the information I gave during registration or enlistment?
If you want to change any of the information provided during registration or enlistment, you can do so yourself, but the Commissioner must be notified online via the VAT-2.6 Form within 15 (fifteen) days of the change.
How do I move the address of my business from one location to another?
You can change the location of your business by submitting an application to the Commissioner in VAT-2.7 Form 15 (fifteen) days before the transfer, subject to justification.
What documents are required for registration or enlistment?
There will be no documents required to be submitted during registration or enlistment. VAT registration or enlistment applications must be submitted in VAT-2.1 Form.
Is registration possible in any residential area?
The VAT law imposes no geographical restrictions on registration. Under the new procedure, no Trade Licence or similar document is required for registration. Postal Codes will be used to determine registration. As a result, registration can be obtained from any location in Bangladesh.
Is it possible to switch from Enlistment to Registration or from Registration to Enlistment?
You certainly can. You can change from Enlistment to Registration based on the Annual Turnover threshold, i.e. if the enlisted Annual Turnover threshold exceeds Taka 8 million. You can also switch from Registration to Enlistment if the registered business’s annual turnover exceeds Taka 3 million but is less than Taka 8 million.
How do I cancel my Registration or Enlistment?
In the event that your business’s registration or enlistment is revoked, you may apply to the Commissioner using the VAT-2.4 Form. If the Commissioner considers reasonable, causes for revocation of registration after suspending registration or enlistment for the time being, he shall direct the provision of a final return within 15(fifteen) days. The Commissioner shall revoke registration or enlistment within 15 (fifteen) days of receiving the final return, subject to proper receipt of information.
What are the differences between provisions in the old and the new law in respect of VAT registration and enlistment in Bangladesh?
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 1991||The Value Added Tax and Supplementary Duty Act 2012|
|The main basis of registration or enlistment is geographical location.If a company maintains more than one branch units, more than one registration is generally applicable.|
During transfer of input or produced goods from one branch of a business concern to another, artificial supply has to be created, as tax has to be paid showing supply.
An institution having more than one registration, each unit of it is considered as separate individuals and every branch has to maintain separate accounts including payment of VAT, they have separate audits also.
BIN with 11 digits would be issued from which Commissionerate, Circle could be evident.BIN is changed immediately after change in address of the business concern.
Many a kind of documents were required for the purpose of registration.Registration or enlistment was issued from the departmental office.
|The main basis of registration or enlistment is the method of maintenance of accounts for the institution.|
Even if a company maintains more than one branch units, a single registration is generally applicable.During transfer of input or produced goods from one branch of a business concern to another, artificial supply need not be created, as that is not considered as supply.
An institution having a single registration for more than one branch unit, each unit of it is not considered as separate individuals and every branch need not maintain separate accounts including payment of VAT, rather needs to maintain accounts for the concerned branch only.
BIN with 9 digits are issued from which Commissionerate, Circle can’t be evident.BIN is not changed even if address of the business concern is changed.
No documents are required for the purpose of registration.Registration or enlistment is issued from the Commissionerate Office.
What is the method of online application for VAT registration and enlistment?
You can apply for online registration in accordance with the following methods:
Step-1: At first visit www.nbr.gov.bd . Select Online VAT Registration option. You reach VAT Online Portal.
Step-2: Create first, User ID and Password there in the name of the individual liable to be registered or enlisted.
Step-3: Enter into the VAT Online System using the User ID and Password and after selecting Registration option, submit VAT- 2.1 Form, duly filled in.
Step-4: If the submission is correct, VAT Registration Certificate or Turnover Tax Enlistment Certificate will be created. You will get that from the System. That will also be sent to your email.
NB: Before furnishing any online application, please go through the relevant practical guide from the website of the NBR. Moreover, you can train yourself from www.nbrelearning.gov.bd in order to learn more in details including watching relevant video films.
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