VDS Guideline
2011
VAT SRO 18 14
695
Value Added Tax
Compulsion of
VAT
Registration for
Diplomatic org
mission NGO
Others
(i) VAT is imposed on goods and services at import stage,
manufacturing, wholesale and retails levels;
(ii) A uniform VAT rate of 15 percent is applicable for both goods
and services;
(iii) 15 percent VAT is applicable for all business or industrial units
with an annual turnover of Taka 2 million and above;
(iv) Turnover tax at the rate of 4 percent is leviable where annual
turnover is less than Taka 2 million;
(v) VAT is applicable to all domestic products and services with
some exemptions;
(vi) VAT is payable at the time of supply of goods and services;
(vii) Tax paid on inputs is creditable/adjustable against output tax;
(viii) Export is exempt;
(ix) Cottage industries (defined as a unit with an annual turnover of
less than Taka 2 million and with a capital machinery valued up to
Taka 3,00,000) are exempt from VAT;
(x) Tax returns are to be submitted on monthly or quarterly or half
yearly basis as notified by the Government.
(xi) Supplementary Duty (SD) is imposed at local and import stage
under the VAT Act, 1991. Existing statutory SD rates are as
follows:
(a) On goods: 20%, 35%, 65%, 100%, 250% & 350%
(b) On services: 10%, 15% & 35%.
Tax Base for VAT:
Import Stage:
Customs Assessable Value + Customs
duty + Supplementary Duty
Domestic/Local Stage: a) Goods (manufacturing): [Production
cost + Profit and Commission (if any) +
Supplementary duty (if any)]
b) Services: [total receipts excluding
VAT but including supplementary duty
(if any)]
Truncated Base / Fixed Value Addition: In some of the cases of
goods and services producers and sellers face difficulties in availing
VAT credit/adjustment facilities due to non availability of invoices
from the sellers of input. In order to remove this operational
difficulty fixed bases such as 10%, 25%, 30%, and 60% value
addition is taken into account for calculation of VATfor a number
of goods and services. In such circumstances net VAT ratefor
different rates of value addition comes to 1.5%, 2.25%, 4.5% and
9%.
VAT at the wholesale and retail stage: In case of wholesalers and
retailers, there is a special provision for a 1.5% percent VAT
known as Trade VAT on the total sale, provided that the
wholesaler/retailer do not avail the facility of input
credit/adjustment. Such tax is also collected at the import stage
from importers of finished goods as an advance trade VAT.
Tariff Value for imposition of VAT: Under the VAT Law, the
government is empowered to fix Tariff Value for some items for
the collection of VAT. Example: tariff value for mild-steel products
produced from imported/locally procured re-rollable scraps is TK
4000.00 per MT. Normal VAT input credit is also not available
under this system.
Deduction of VAT at source: As deduction at source is also
practiced in case of VAT on certain services, Government, SemiGovernment, Autonomous Bodies, NGOs, Banks, Insurance
Companies and Limited Companies are authorized by the
government to deduct applicable VAT on the services at source.
Excise Duty: At present excise dutyapplies to only two items: bank
depositsand domestic air ticket (Tk. 250 per journey).