Goods and service Based on Specific VAT
What are goods and service Based on Specific VAT in Bangladesh?
In Bangladesh, alongside the standard 15% VAT rate and various exemptions, specific reduced VAT rates are applied to a defined set of goods and services. These rates are typically 5%, 7.5%, and 10%. Additionally, some goods and services are subject to a specific amount of tax rather than a percentage.
Here's a breakdown of goods and services often subject to these specific VAT rates:
Goods with Reduced VAT Rates (Examples):
- 5% VAT:
- Certain agricultural products and their immediate processing (e.g., maize starch, rapeseed oil, machine-made biscuits above a certain price, packaged pickles and sauces, fruit pulps and juices of specific fruits).
- Locally manufactured paper of certain specifications (e.g., cream laid paper, white writing paper, printing paper).
- Specific textile products (e.g., cotton yarn waste, waste grey denim, man-made fiber fabrics).
- Some construction materials (e.g., solid stone, certain metal alloys, HR coil to CR coil processing, CR coil to GP sheet processing).
- Environment-friendly products like energy-saving bulbs (certain wattages).
- Public transportation vehicles with a carrying capacity of 1 to 1.5 tons (trucks, vans, pick-ups).
- Certain locally manufactured household items (e.g., aluminum kitchenware).
- LPG gas.
- Cold generating form Boro Pukuria cold mine.
- Burn/unusable transformer oil (reprocessed).
- Lubricating oil/rubber processing oil.
- Bulk imported petroleum bitumen.
- Supplying laminating driving licenses to BRTA.
- Plastic tableware, kitchenware, and other household items (excluding tiffin boxes and water bottles) are subject to a specific VAT rate in Bangladesh.
- CCB/CCA treatment, Cryojot treatment, and seasoning of wood.
- Exercise books and spiral notebooks (above a certain GSM).
- Paper cones.
- Landing craft of specific types.
- 7.5% VAT:
- Furniture manufacturing (if manufacturers directly deliver to consumers).
- Furniture sales centers (subject to conditions related to VAT payment at the manufacturing stage).
- Amusement and theme parks.
- 10% VAT:
- Machine-based laundry services.
- Repairing and servicing organizations.
- Tailoring shops and tailors (except air-conditioned ones).
- Auto sawmills.
- Cinema halls and cinema producers.
- AC launch services.
- Transport contractors (except for petroleum goods, which may have a 5% rate).
- Cleaning and maintaining services.
- Participants in board meetings.
- Non-AC hotels (likely reduced from 15% in recent adjustments).
- Sweet shops (likely reduced from 15% in recent adjustments).
- Own-brand clothes (likely reduced from 15% in recent adjustments).
Services with Reduced VAT Rates (Examples):
- 5% VAT:
- Restaurants (likely reinstated at this rate after a temporary increase).
- English medium schools.
- Electricity distribution (except for irrigation and cold storage).
- Internet agency services (except for providing internet to educational institutions).
- IT-enabled services (ITeS).
- Transport contractors for petroleum goods.
- Indenting organizations (commodity brokerage services).
- 7.5% VAT:
- Non-AC hotels (likely reduced from 15%).
- Procurement providers.
- Credit rating agencies.
- 10% VAT:
- Motor garages and workshops.
- Film studios and cinema producers (likely adjusted).
- Printing presses (except for books, journals, and educational products for students, which may be exempt).
- Machine-based laundry services.
- Repairing and servicing organizations.
- Transport contractors (except petroleum goods).
- Cleaning and maintaining services.
- Participants in board meetings.
- Tailoring shops and tailors (except air-conditioned ones).
- Auto sawmills.
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Goods and Services with Specific Amounts of Tax:
The VAT law also allows for the imposition of a specific amount of tax on certain goods or services instead of a percentage. These are less common but can apply to items like:
- Domestic air tickets: A fixed amount per ticket depending on the destination.
- Excise duty on certain items: While not strictly VAT, excise duties are specific amounts levied on the production or sale of particular goods.
Important Considerations:
- Regular Updates: The specific goods and services falling under these reduced rates and specific tax amounts can change based on government policies and notifications issued by the National Board of Revenue (NBR). It's crucial to refer to the latest Statutory Regulatory Orders (SROs) issued by the NBR for the most up-to-date information.
- Conditions and Classifications: The application of these specific rates often comes with conditions related to the nature of the goods, their HS codes (Harmonized System codes), or the specific type of service provided.
- Recent Changes: As of early 2025, there were discussions and some rollbacks of increased VAT rates on certain items and services following public feedback. This demonstrates how VAT regulations can change over time. For instance, VAT on restaurants and non-AC hotels saw potential reductions from a temporary 15% hike.
To get a precise and current list of goods and services with specific VAT rates, it is best to consult the official website of the National Board of Revenue (NBR) of Bangladesh and review the latest VAT-related SROs.
Tags:
VAT& TAX (Corporate)