General changes regarding VAT registration, rates, and administration include the following:
- An increase in the general VAT registration threshold from BDT 8 million to BDT 30 million in annual turnover;
- The introduction of a 4% turnover tax for SMEs with annual turnover between BDT 5 million and BDT 30 million (may opt to voluntarily register for VAT);
- The introduction of a VAT exemption for small and marginal traders with an annual turnover of up to BDT 5 million;
- The introduction of reduced VAT rates of 5.0%, 7.5% and 10.0% for specific goods and services, in addition to the standard 15% rate;
- The introduction of a fixed VAT rate of 5% for local traders and commercial importers;
- The introduction of VAT rates of 2.4% and 2.0% for pharmaceutical and petroleum products, respectively, on local supplies;
- The extension of the existing VAT and supplementary duty exemptions given to heavy industries such as automobiles, refrigerators, freezers, air conditioners, motorcycles, mobile industries, etc.;
- The introduction of new online services for VAT registration, payment, return filing, etc.;
- The abolition of the price declaration system before the supply of goods.
VAT Place of Supply Rules for Non-Residents
New place of supply rules are introduced for non-resident suppliers, including that any supply made by a non-resident carrying on an economic activity from or through a fixed place in Bangladesh is treated as being made in Bangladesh, and any supply not made from or through a fixed place in Bangladesh is treated as being made in Bangladesh if the supply:
- relates to immovable property situated in Bangladesh;
- relates to a good and that is transferred, conferred, installed, or assembled in Bangladesh; or
- is any of the following and is made to VAT unregistered person:
- the services are physically provided in Bangladesh by the service provider staying in Bangladesh at the time of supply;
- the services are directly related to land located in Bangladesh;
- the services are radio or television broadcasting, or telecasting services received at an address in Bangladesh;
- the services are electronic services delivered to a person located in Bangladesh at the time of supply; or
- the supply is of a telecommunications service initiated by a person located in Bangladesh at the time of supply, other than a telecommunications supplier or a person who is a global- roaming person temporarily staying in Bangladesh.
Further to the above, a supply of services to a registered recipient shall be treated to have been made in Bangladesh if:
- the recipient of the supply carries on an economic activity from or through a fixed place in Bangladesh; and
- the supply is made for the purposes of that economic activity or to that fixed place.
In general, where a non-resident does not carry on an economic activity from a fixed place in Bangladesh, they are required to appoint a VAT agent to comply with their VAT obligations. However, where imported services are supplied to registered persons, the reverse charge generally applies, in which case the recipient accounts for the VAT due.