Investment & Trade
VAT and Supplementary Duty Act 2012
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Visit the source page for more details: https://nbr.gov.bd/
Executive Summary
The Value Added Tax and Supplementary Duty Act 2012 (effective 1 July 2019, after 7-year transition) replaced the VAT Act 1991 and modernised Bangladesh's indirect tax regime. Key features: (1) standard VAT rate of 15% on most goods and services (down from a complex multiple-rate system under the 1991 Act), (2) reduced rates of 5%, 7.5%, 10% for select essential items (food, medicines, agricultural inputs), (3) supplementary duty on luxury/sin goods (tobacco, beverages, cars) ranging from 100% to 350%, (4) input tax credit mechanism allowing businesses to claim VAT paid on inputs against output VAT, (5) mandatory VAT registration for businesses with annual turnover above BDT 50 lakh (USD 50,000), (6) online registration and return filing via VAT Online Portal (vat.gov.bd), (7) reverse charge mechanism for imported services. For exporters: zero-rated supplies (export sales) attract 0% VAT with full input tax credit refund — making exports effectively VAT-free. Exporters must file monthly VAT returns and submit the EE-2 form for cash incentive eligibility.
Key Points
- Enacted 2012, effective 1 July 2019 (7-year transition)
- Replaced VAT Act 1991
- Standard VAT rate: 15%
- Reduced rates: 5%, 7.5%, 10% for essentials
- Supplementary duty: 100%-350% on luxury/sin goods
- Input tax credit mechanism
- Mandatory registration: turnover above BDT 50 lakh
- Online portal: vat.gov.bd
- Reverse charge for imported services
- Export sales: 0% VAT (zero-rated) with full input credit refund
- Exporters file monthly VAT returns
- EE-2 form required for cash incentive eligibility
- NBR administers (nbr.gov.bd)
Full Details
Value Added Tax legislation governing VAT rates, exemptions, and compliance requirements for businesses in Bangladesh.