No matter what your profession or financial status is, if you clicked on this, then it’s quite clear that you need to know the basics of NBR VAT policies in general.
Understanding the ins and outs of VAT policy can sound a bit daunting at first. Every detail on VAT that is available on the internet is either too complicated or too general that many people click out before reaching the part that they wanted to know about.
Regardless of where you live or where your business is based on, if you have customers in Bangladesh, you must follow Bangladeshi VAT (value-added tax) rules.
That’s what this guide will do for you. This guide includes every detail you need to know about VAT laws in Bangladesh, no matter where your business is located.
What is NBR VAT
To define VAT in simple words, it is the consumption tax throughout Bangladesh, imposed on almost everything sold in the country regulated by NBR (National Board of Revenue). There are specific rules around retail products, which you must follow carefully to stay tax compliant if you are a retail business owner.
So if you sell retail products to a customer in Bangladesh, you must charge the VAT rate decided by the Government.
Well, it’s simple in theory. But to apply it practically, Bangladesh VAT has a bit more complexity that one would imagine. You don’t necessarily need to add tax to every sale you make. However, it can depend on the amount of sales you make in the country, whether the sale is B2B or B2C, or you follow any other format. There is going to be a more detailed discussion about these throughout the rest of the guide about NBR VAT!
Let’s answer some of your FAQs about VAT in Bangladesh.
First and foremost, the most frequently asked question regarding VAT is that, “What qualifies a business to pay VAT?”
Bangladesh has an annual sales registration limit of BDT 30 million, based on local sales.
Now you may further ask, “what does this mean?”
Well, the threshold amount refers to your total sales in the country, during any 12 months. This can be a calculation of sales in the last twelve months or a prediction of sales in the next twelve months.
If your total sales in Bangladesh are below BDT 30 million, then you don’t need to worry about VAT at all.
But once your local sales cross BDT 30 million, then you must have to register for VAT. Then you must comply with all of the Bangladeshi rules around tax rate and collection, which include invoices and filing returns.
Also, you must know that, according to NBR (National Board of Revenue), if your local sales are above BDT 50 million, then you must automate your systems using any of the software services enlisted by NBR.
NBR enlisted VAT companies
One of the enlisted services is Southtech’s web-based VAT management software, Easy VAT.
Southtech EasyVAT is a web-based VAT management software. EasyVAT combines a user-friendly interface with automated VAT calculation system.
The software follows the NBR guidelines and rules of Bangladesh.
With EasyVAT, you can quickly generate Government recommended Mushak reports and submit electronic copies of final VAT returns accurately.
You can also consolidate sales and inventory information in real-time. Security, back office, production, sales, and VAT are the five powerful modules in EasyVAT.
Secondly, often people want to know, “Why shall I pay VAT?”
Well, legally speaking, you have no other option but to pay your Valu Added Taxes on time. This will prevent you from facing any legal issues in the future.
Also, the development of our country won’t be possible without the money received from VAT.
Many people want to know, “Is the VAT procedure too complicated?”
In a way, it is. But if you study it for once, it shouldn’t be tough for you to understand the VAT procedure.
If you are a regular consumer, then just know that, if you purchase goods from a company that is eligible to pay VAT, then you would have to pay your share of the VAT. From there, it’s the company that you just purchased from takes the lead from there.
So now, if you are one of those companies dealing with VAT, you need to know that, in association with the law and relevant rules of NBR, you would have to pay VAT on the sales that you made. Again keep in mind that only worry about the VAT chain maintenance procedure.
Jokes apart, to give you a closer look at how the VAT amount gets fixed throughout all stages from production to sale, here is a short breakdown of it:
Image courtesy: NBR Website
Even though this breakdown mostly has highlighted the role of the business that deals with VAT directly. The consumers have quite a lot to contribute to the VAT procedure.
“What is the responsibility of a VAT consumer?”
As a consumer, your responsibility is to collect and check the invoice from the seller during purchase. So when you get the receipt after making a payment, make sure to check the VAT details.
Also, look for VAT registration number mentioned on the receipt. Identifying the VAT registration number is a sure-shot way of ensuring that your hard-earned money is safe.
What role does Business owners have to play in ensuring safer NBR VAT
Business owners have the most significant role to play in ensuring safer VAT payment. Their role in this whole situation is similar to the role of a middle man.
Businesses who are eligible to pay VAT, they must ensure that they have registered under VAT process. If you don’t register under that, then you might be penalized for it in the future.
The concept of VAT might seem intimidating at first. You may feel over flooded with information and processes.
However, for businesses that have to deal with VAT directly, a software solution can definitely make your life easier.
That is why Southtech has built the most convenient VAT management software EasyVAT for you.
To know more how this software can aid in your VAT transactions, contact us today!
We would be happy to answer all your queries.