Bangladesh
VAT Standard rate in Bangladesh
VAT standard rate in Bangladesh in 2025 is 15%, which applies to supplies of goods in Bangladesh and import. Supplies of basic essential goods to Bangladesh are not subject to VAT. Export is zero-rated.Reduced and increased rates in Bangladesh
Bangladesh uses several reduced ("truncated") VAT rates depending on the product or service
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1.5% – Land development
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2% – 2.4% – Hospital/cleaning services
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4.5% – Legal/advisory services
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5% – Domestic electricity; IT-based services; selected food (e.g., juices, CNG)
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7.5% – Commercial rentals and machinery services; motor workshops
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10% – Advertising; rented shops (>300 m²)
VAT Zero rate in Bangladesh
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Exports of goods and services are zero-rated (0%), allowing businesses to reclaim input VAT
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Also applies to temporary imports and exports via warranty agreements
A reduced rate in Bangladesh
Bangladesh applies several reduced VAT rates depending on the type of goods or services. These rates are part of what's known locally as the "truncated base system." For example:
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A 1.5% to 2.4% rate applies to land development and hospital or cleaning services.
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4.5% is used for legal and consulting services.
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5% applies to domestic electricity supply, IT-enabled services, certain food and beverage items like packaged juice and compressed natural gas (CNG).
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A 7.5% rate applies to services like commercial machinery rentals, auto workshops, and some repair services.
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The 10% rate is used for advertising services and commercial rental spaces such as large retail shops.
- These reduced rates are typically applied in place of standard input VAT recovery, meaning the supplier charges a lower rate but cannot reclaim VAT on purchases related to those supplies.
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VAT Standard Rates
The standard VAT rate in Bangladesh is 15%, and it applies to digital services provided by both resident and non-resident suppliers to consumers in Bangladesh. This includes services such as:
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SaaS (software-as-a-service)
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Cloud computing
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Streaming (music, video, games)
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Online advertising
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Web hosting
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Downloadable software, apps, and media
For non-resident providers, VAT registration is mandatory from the first B2C sale (no threshold). VAT must be collected and remitted to the National Board of Revenue (NBR) via their digital VAT platform.
VAT Reduced rate
Digital services are subject to the standard 15% VAT rate. Bangladesh does not apply any reduced or increased VAT rates to digital services.
The country does have reduced VAT rates (1.5% to 10%) for certain local services and industries (e.g. healthcare, legal services, and electricity), but these do not apply to digital or electronically supplied services, especially when supplied cross-border.
VAT Zero Rate
Digital services are zero-rated only if they qualify as exports. For example:
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A Bangladeshi business supplying digital services to a foreign customer outside Bangladesh may apply the 0% VAT rate, provided proper documentation and proof of export are maintained.
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Zero-rating means VAT is charged at 0%, and the supplier can claim input VAT credits related to those sales.
- However, for digital services imported into Bangladesh (i.e., used by Bangladeshi customers), 15% VAT applies.
Seeking for a VAT Registration? Get Your Custom Quote! Answer a few quick questions and receive a tailored pricing estimate for your VAT registration and compliance needs. Get a Fee Quote
VAT registration threshold
Businesses must register for VAT purposes in Bangladesh if their annual revenue exceeded BDT 8 million (approx. EUR 67,000).Tax representative
Non-resident businesses must appoint legal VAT agent, who will be liable for registration, VAT filings and payments in Bangladesh.Registration procedure
Businesses must submit the VAT application registration form VAT 2.1 to the Bangladesh National Board of Revenue in order to get the Business Indentification Number within 15 days from the date the obligation was incurred. The application will be processed within 3 (three) working days, after which a Business Identification Number will be issued on form VAT 2.3. The registration certificate can be received online.Deductible VAT
Businesses can reclaim input tax by deducting it from output tax. Expenses that are not relevant to the business cannot be claimed for deduction. Input tax is not recoverable to the businesses that are not registered for VAT purposes in Bangladesh.Keeping records
The period of keeping records in Bangladesh must be at least five years.VAT returns filing and payment date
Business must submit returns and pay VAT in Bangladesh electronically on monthly basis. The deadline is the 15th day of the month following the reporting period.Penalties in Bangladesh
- Penalty for non-submission of VAT return – fine of BDT 10,000 (approx. EUR 83).
- Penalty for late payment – interest of 1% per month.
- Penalty for false – fine equivalent to the taxable amount or/and imprisonment.
- Penalty for fraud – fine in amount from BDT 10,000 to BDT 200,000 (approx. EUR 83 – EUR 1,665) or/and imprisonment.
Threshold
The registration threshold under the new VAT procedure is Taka 8 million and enlistment threshold is Taka 3 million. For businesses providing digital services, VAT registration is mandatory if their annual turnover exceeds BDT 3 million. Below this threshold, registration is optional, but businesses may choose to register voluntarily to avail of VAT input credit benefits.Pieces of Evidence
To determine that digital services have been provided in Bangladesh, the National Board of Revenue (NBR) uses certain criteria and evidence that are critical to confirm that digital services have been provided in Bangladesh:- Customer Location (IP Address; Billing Address);
- Payment Information (Credit/Debit Card Details; Bank Account Details; Mobile Payment Services);
- Contractual Agreements (Service Agreements; Terms of Service);
- Communication Records (Email and Correspondence; Support Requests);
- Usage Patterns (Access Logs; User Registration Information);
- Regulatory Compliance (Licenses and Permits; Compliance Documentation);
- Physical Presence (Local Office or Branch; Local Representative).
E-Services List
In Bangladesh, the National Board of Revenue (NBR) includes various digital services under VAT regulation, this encompasses services such as:- software development,
- digital advertising,
- cloud computing,
- online streaming services,
- IT-enabled services like data processing and web hosting.
Registration Procedure
Enrollment is required if the turnover of economic activity exceeds BDT 8 million in the last 12 months. It is required to register within 15 days from the date the need for registration arises. Service providers can register for VAT online through the VAT Online System (VOS) on the NBR’s official website or submit document to the tax office. Business identification number (BIN), trade license, and relevant business information are required for registration. Once the application is submitted, NBR reviews it and, upon approval, issues the VAT registration certificate.Tax Representative
Foreign digital service providers without a physical presence in Bangladesh must appoint a local tax representative. This representative handles VAT compliance, including registration, filing returns, and maintaining records.Keeping Records
Businesses are required to maintain comprehensive records of all transactions, including sales and purchases, for at least 6 years. These records must be accessible for audit purposes and should be kept in a manner prescribed by the NBR.Filing VAT Return and Payment Date
- VAT returns must be filed monthly by the 15th of the following month. For example, the VAT return for June must be submitted by July 15th. VAT returns can be submitted electronically through the NBR portal or at one of the NBR offices.