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| Goods and service other than standard VAT rate |
What are goods and service other than standard VAT rate in Bangladesh?
In Bangladesh, goods and services are subject to various VAT rates other than the standard 15%. These include:
1. Reduced VAT Rates:
- 5% VAT: This rate applies to a range of goods and services, including certain agricultural products, locally manufactured paper and textiles, some construction materials, environment-friendly products, public transport vehicles (certain capacities), specific household items, LPG gas, and various other notified items and services like restaurants (likely reinstated), English medium schools, and IT-enabled services (ITeS).
- 7.5% VAT: This rate often applies to furniture manufacturing (under specific supply conditions), furniture sales centers, and amusement/theme parks. Non-AC hotels and procurement providers also fall under this category.
- 10% VAT: This rate is applicable to services such as motor garages and workshops, film studios (likely adjusted), printing presses (excluding educational materials), machine-based laundry services, repairing and servicing organizations, transport contractors (excluding petroleum), cleaning and maintenance services, participants in board meetings, non-AC hotels, sweet shops, and own-brand clothes (these last three likely reduced from 15% recently).
2. Specific Amounts of Tax:
- Instead of a percentage, some goods or services might have a fixed amount of VAT imposed. Examples include domestic air tickets where a specific tax amount is levied per ticket.
3. Zero-Rated Supplies:
- A 0% Value Added Tax (VAT) rate applies to specific goods and services in Bangladesh, primarily encompassing the export of both goods and services.
- This primarily includes exports of goods and services. Businesses making zero-rated supplies may be able to claim back VAT paid on their inputs.
4. VAT Exemptions:
- A wide range of goods and services are entirely exempt from VAT in Bangladesh. These include:
- Live animals (excluding ornamental fish).
- Fresh milk and cream (under specific conditions).
- Live plants.
- Basic living services like agricultural land preparation.
- Transportation of goods for export.
- Services in specific zones like Economic Zones and High-Tech Parks (procurement and electricity distribution).
- Services related to temporary imports for re-export.
- Supply of goods under warranty and related repair/replacement services within the warranty period.
- Healthcare and educational services.
- Essential food items like rice, wheat, and pulses.
5. Goods Based on MRP (Maximum Retail Price):
- For specific goods like tobacco products and alcoholic beverages, the VAT (and potentially Supplementary Duty) is included within the MRP, and the manufacturer typically pays it at the first stage of supply.
It's crucial to remember that the specific VAT rates and exemptions can change based on government regulations and notifications issued by the National Board of Revenue (NBR). For the most accurate and up-to-date information, always refer to the official pronouncements and Statutory Regulatory Orders (SROs) published by the NBR. Recent revisions in early 2025 indicate the dynamic nature of these regulations, with some previously increased rates being rolled back on items like mobile services, internet, restaurants, and clothing.