How to Complete the VAT Registration Process in Bangladesh

Value-Added Tax (VAT) is essential for doing business in Bangladesh. VAT registration becomes mandatory if your business crosses a certain turnover threshold or you engage in specific types of services (mainly digital and foreign services). Here’s an in-depth guide to help you navigate the VAT registration process smoothly and fully comply with Bangladesh’s tax regulations.

VAT Registration Thresholds

Understanding the VAT thresholds is the first step in determining whether your business needs to register:

  • Mandatory VAT Registration:
  • Businesses with an annual turnover of BDT 5 million (50 lakh) or more must register for VAT under the VAT and Supplementary Duty Act, 2012.
  • Turnover Tax Enlistment:
  • If your business turnover is between BDT 3 million (30 lakh) and BDT 5 million, you must register for Turnover Tax instead of VAT. This involves a simpler tax mechanism but still requires official enlistment.
  • Compulsory VAT Registration for Certain Businesses:
  • Irrespective of turnover, some businesses (importers, exporters, manufacturers, or service providers in sectors like telecom, banking, or digital services) must register for VAT.

Note: Failing to register once you cross the threshold could lead to heavy penalties.

Required Documents for VAT Registration

You’ll need to prepare and submit several documents for VAT registration:

  • Valid Trade License.
  • TIN (Taxpayer Identification Number) Certificate.
  • National ID Card or Passport (for foreigners).
  • Company Incorporation Certificate (for companies).
  • Memorandum and Articles of Association (for limited companies).
  • Ownership proof or rent agreement for business premises.
  • Bank Solvency Certificate and account details.
  • Import Registration Certificate (IRC) / Export Registration Certificate (ERC) (if applicable).
  • A detailed site/location map of your business premises.
  • Recent passport-size photographs of directors/proprietors.
  • Board Resolution (for corporate applicants) authorizing VAT registration.

Tip: Keep scanned copies ready to speed up the online application process.

Step-by-Step Registration Process

Here’s the detailed breakdown of the VAT registration procedure:

Create an Account on the VAT Online Portal:

Visit www.vat.gov.bd and create a user ID.

Login and Start the Registration:

Select the option to apply for VAT registration (Form VAT 2.1).

Fill Out the Application:

Carefully input business information, turnover details, bank information, and business premises information.

Upload Required Documents:

Submit all necessary documents through the portal in PDF/JPEG format.

Verification by VAT Office:

The concerned VAT circle office may physically inspect the business premises.

Issuance of BIN:

You’ll receive your Business Identification Number (BIN) electronically upon approval.

Display BIN Certificate:

You must display your VAT registration certificate at your place of business.

Important: Ensure the information you provide is complete and correct. Mistakes can delay your registration.

Role of VAT Agents for Foreign Entities

Foreign businesses supplying goods or services in Bangladesh without permanent establishment must appoint a VAT agent registered in Bangladesh.

The responsibilities of a VAT agent include:

  • Applying for VAT registration.
  • Filing VAT returns.
  • Paying VAT on behalf of the foreign entity.
  • Maintaining necessary VAT records.

Foreign companies must choose agents carefully, as the agent and the foreign principal will jointly bear any VAT liability.

VAT Registration for Digital Service Providers

Digital businesses like streaming services, cloud computing companies, or online marketplaces catering to Bangladeshi customers must register for VAT even without a physical presence in Bangladesh.

Key points:

  • Registration must be completed before starting operations.
  • VAT is generally charged at 15%, although some IT-enabled services qualify for a 5% rate.
  • Returns must be filed quarterly or monthly, depending on the structure.

Failure to register can lead to legal action, including blocking digital access to the Bangladeshi market.

Processing Time and Government Fees

  • Standard Processing Time:
  • 7 to 15 working days, depending on the verification process.
  • Government Fees:
  • Currently, no official government fees are charged for VAT registration. However, consultancy firms might charge service fees for assisting you.
  • Additional Time Factors:
  • Delays can happen if your documents are incomplete or verification visits are pending.

VAT Return Filing and Payment Deadlines

Once registered, businesses must fulfill VAT compliance monthly:

  • VAT Return Filing:
  • Submit VAT return (Form Mushak 9.1) for the previous month’s transactions by the 15th of every month.
  • Payment of VAT:
  • VAT must be deposited to the government treasury before filing the VAT return.
  • Filing Mode:
  • All filings are done online through the NBR VAT portal.

Non-filing or incorrect filing can lead to heavy penalties and interest charges.

Penalties for Non-Compliance

The NBR enforces strict penalties for non-compliance with VAT laws:

  • Failure to register: Fine of up to BDT 50,000.
  • Late filing of returns: Daily fines plus additional interest charges.
  • Filing false returns: This can attract penalties of up to BDT 100,000 and criminal prosecution.
  • Non-payment of VAT: 2% interest per month on outstanding VAT.

Even unintentional non-compliance is penalized if not corrected promptly.

Maintaining VAT Records

VAT-registered businesses must maintain detailed and organized records:

  • Sales and Purchase Registers (Mushak-6.1 and Mushak-6.2).
  • Tax invoices and credit notes.
  • Bank statements.
  • VAT payment receipts.
  • Inventory records (Mushak-6.3).

These records must be preserved for at least 5 years and should be available for inspection at any time by VAT officers.

Seeking Professional Assistance

Given the complexities involved, it’s highly recommended to consult:

  • VAT Consultants.
  • Chartered Accountants.
  • Corporate Law Firms.

Professional advisors can help:

  • Avoid mistakes during registration.
  • Ensure timely and accurate VAT filing.
  • Handle VAT audits and inspections smoothly.
  • Guide digital and foreign service providers on special compliance issues.

Proper expert support ensures compliance and saves your business from future financial and legal risks.

Final Words

VAT registration in Bangladesh is a legal obligation with continuous compliance responsibilities. Whether you are a local business, a foreign entity, or a digital service provider, staying updated with the rules and seeking professional help when necessary can secure your operations and avoid costly penalties.

Always stay one step ahead by maintaining records properly, filing timely returns, and understanding changes in VAT laws.