Advance trade VAT (ATV)payments at import

How does advance tax pay at import stage?

In Bangladesh, Advance Tax (AT) at the import stage is a crucial component of the country's tax system, alongside Customs Duty (CD), Supplementary Duty (SD), Regulatory Duty (RD), Value Added Tax (VAT), and Advance Income Tax (AIT). Here's how it generally works:

1. What is Advance Tax (AT) at import stage?

Under the VAT Act: Advance Tax (AT) at the import stage is imposed under the VAT and Supplementary Duty Act, 2012. It's essentially an advance payment of VAT that importers make at the time of clearing their goods from customs.
Not the same as AIT: It's important to distinguish AT (Advance Tax under VAT) from AIT (Advance Income Tax), which is also collected at the import stage. While both are advance taxes, they fall under different laws and have different adjustment mechanisms.

2. How is it paid?

Collection by Customs Authority: When goods are imported into Bangladesh, the Customs authority collects the Advance Tax (AT) along with other import duties and taxes (like CD, SD, RD, VAT, and AIT). This collection happens at the point of entry, before the goods are released from customs.
Part of the Import Assessment: The AT is calculated as a percentage of the assessable value of the imported goods (which typically includes the cost, freight, insurance, and other charges, plus any Customs Duty, Regulatory Duty, and Supplementary Duty).
Integrated into the Duty Payment Process: Importers pay all these charges as part of the customs clearance process, usually through designated banks.

3. Rates of Advance Tax (AT):

The standard rate of Advance Tax (AT) is generally 5% of the taxable value of imported goods.
However, the National Board of Revenue (NBR) issues Statutory Regulatory Orders (SROs) that can provide exemptions or different rates for specific goods or industries. For example, certain raw materials or essential goods might have a lower or even zero AT. It's crucial to refer to the latest NBR SROs for the applicable rates.

4. Adjustment and Refund:

Adjustable: The Advance Tax paid at the import stage is generally adjustable against the importer's regular VAT liability in their monthly VAT returns (Mushak-9.1). This means the importer can claim the AT paid as an input tax credit.
Time Limit for Adjustment: Typically, importers can adjust this advance tax in the tax period it was paid or within the subsequent four tax periods.
Refund: If the importer is unable to fully adjust the advance tax within the allowed periods, they can apply to the relevant Commissionerate for a refund of the unadjusted amount. However, the refund process can sometimes be complex and may require proper documentation and follow-up.

Why is it imposed?

The imposition of Advance Tax at the import stage serves several purposes for the government:

Revenue Generation: It helps the government collect revenue upfront, contributing to the overall tax collection.
Widen Tax Net: It brings more businesses, especially those involved in imports, into the tax net.
Prevent Evasion: It acts as a mechanism to prevent tax evasion by ensuring some tax is collected at the initial stage of the supply chain.

Key takeaway:

For anyone involved in importing goods into Bangladesh, it's essential to understand the Advance Tax (AT) mechanism, its rates, and the procedures for adjustment and refund. Always consult the most recent VAT laws and SROs issued by the NBR for the most accurate and up-to-date information, as these can change.

How does advance tax (ATV) pay at import stage?