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Value Added Tax or VAT is such an indirect tax which is paid by the consumer through a registered person. Value Added Tax or VAT on a particular good or service is determined on the basis of adding an actual level of value of the said goods or service adjusting input tax payable against the supplied goods or service.

Who pays the VAT?

The procedure of Value Added Tax or VAT is an automatic taxing procedure based on input tax credit against supply or sale. The supplier accepts the paid-up VAT on the purchase tax of the goods or service during the purchase as credit as against the VAT included in the price during the supply of such goods or services and he pays the net amount of VAT.

Therefore, the seller realizes the VAT from within the price obtained from the buyer & deposits the net amount of VAT to the Government treasury after taking on VAT at the purchase level. As VAT is considered to be a consumer tax, the consumer shall pay the whole amount of VAT as applicable on goods or service. As an intermediary procedure, the producer, the supplier, all at every level of sale, shall realize VAT on behalf of the Government and deposit to the Government treasury.

The VAT payer is the last consumer of goods or service in the Value Added Tax procedure. The supplier or seller realizes VAT from the purchaser at every level of sale and deposits to the Government treasury.

Why do we need VAT  registration?

According to the Value Added Tax and Supplementary Duty Act 2012, VAT registration of all business entities has been made compulsory.

For those for whom VAT registration is mandatory:

1. Those with an annual sale price of between tk. 50 lakh and tk. 3 crore will have to register for turnover VAT.

But it does not include the following sale price, namely:

(A) the price of the exempted supply;

(B) the selling price of capital assets;

(C) the selling price of an institution or part of an economic activity; Or

(D) the value of supplies made as a result of the permanent cessation of economic activities;

2. Those whose annual selling price is above Tk 3 crore will have to register for compulsory VAT.

Also the following persons / businesses have to take compulsory VAT registration irrespective of the selling price:

1. All persons / organizations supplying / producing / importing goods / services for which supplementary duty is levied
2. All persons / organizations who provide goods / services against tender / contract / work order
3. Individuals / institutions engaged in import-export business
4. Manufacturers / Service Providers / Business Suppliers / Shops located in Supershops and Shopping Malls / Establishments in City Corporations and District Cities as per General Order No. 17.

For those for whom VAT registration is not mandatory:

1. Whose annual sales value is less than tk. 50 lakh and not related to the nature of the business mentioned above.
2. Goods and services exempted from VAT mentioned in the first schedule.

To continue your normal business operation including participation in tender, banking activities and export & import, you need to apply for VAT registration and receive a Business Identification Number (BIN).

How to apply for VAT registration?

Applying for VAT registration is free, but there are requirements you have to meet to be entitled. You need to provide the right information to support your application. This will also reduce possible delays in processing your request.

What is Registration or Enlistment?

Under the Value Added Tax procedure, any importer, exporter or taxable supplier has to be involved in the VAT Procedure. This involvement takes place with the VAT procedure through registration or enlistment. He has to abide by the VAT law through taking Business Identification Number in the prescribed manner under the purview of the VAT law. And under the purview of the VAT law, taking Business Identification Number in the prescribed manned is called registration or enlistment.

When shall I have to take Registration or Enlistment?

Registration shall have to be taken when turnover or economic activities exceeds Taka 8 million in every 12 months and Englishment shall have to be taken when turnover of economic activities exceeds TAKA 2 million in every 12 months. You have to take Registration or Enlistment within 15 days of arising the necessity of Registration or  Enlistment Registration or Enlistment shall take effect from the 1st date of the following month.

What is a Business Identification Number?

Business Identification Number is the business identification number taken by an individual on the basis of turnover of his economic activities. This identification number can’t determine the nature and activities of the individual’s economic activities. It is a specific number of 9 digits by which a taxpayer can be identified. A tax payer’s state of business affairs can be identified through this number from the website of the NBR.

 

How can I obtain a BIN?

If the limit of the annual turnover of my economic activities exceeds the prescribed limit, an application has to be submitted to the Commissioner in Form- VAT 2.1.

After proper scrutiny and examination, a Registration Certificate/Turnover Tax Enlistment Certificate will be issued in your favor in Form-VAT 2.1 containing a BIN from the VAT system within three working days.

Not everybody is entitled to a BIN. Although everybody can apply for free, only those who are entitled will get and hold a BIN.