THE VALUE ADDED TAX AND SUPPLEMENTARY DUTY ACT, 2012, CHAPTER III & IV

CHAPTER THREE
IMPOSITION OF VAT

3. Imposition of VAT.—(1) Subject to other provisions of this Act, value added tax shall be imposed and payable on the taxable import and taxable supply.

• The payable amount of the Value Added Tax shall be assessed and determined by multiplying the VAT rate specified in sub-section (3) with the value of the taxable import or of the taxable supply.
• Unless otherwise provided in this Act, the rate of VAT, in relation to taxable import or taxable supply, shall be 15 (fifteen) percent.

16. Persons liable to pay value added tax.—Every person specified below shall be liable to pay VAT, namely—

• in relation to taxable import: the importer;
• in relation to any taxable supply in Bangladesh: the supplier;
• in relation to any taxable supply of imported service: the recipient of such supply;
• in relation to any sale, in the prescribed manner, of any good by an auctioneer on behalf of a registered person: the auctioneer.

17. Supplies made within Bangladesh.—(1) For the purposes of section 15, the following supplies shall be treated to be made within Bangladesh, namely—

• any supply made by a resident;
• any supply made by a non-resident carrying on an economic activity from or through a fixed place in Bangladesh;
• any supply other than the ones mentioned specified in clause (b) made by a non-resident if the supply-
• relates to an immovable property and the land attached to it situates in Bangladesh;
• relates to a good and that is transferred, conferred, installed or assembled in Bangladesh;
• is any of the following and is made to VAT unregistered person:—
• the services are physically provided in Bangladesh by the service provider staying in Bangladesh at the time of supply;
• the services    are    directly related to land located           in

Bangladesh;

• the services    are   radio or television broadcasting          or

telecasting services received at an address in Bangladesh;

• the services are electronic services delivered to a person located in Bangladesh at the time of supply;
• the supply is of a telecommunications service initiated by a person located in Bangladesh at the time of supply, other than a telecommunications supplier or a person who is a global- roaming person temporarily staying in Bangladesh.
• For the purposes of sub-clause (ii) of clause (c) of sub-section (1), where goods are imported by a non-resident and supplied before they are entered for home consumption, such supplies shall be deemed to have been made outside Bangladesh.
• For the purposes of sub- sub-clause (E) of sub-clause (c) of sub-section
• , the person who initiates a supply of telecommunications services is the person—
• identifiable by the supplier of the services as—
• the one who controls the initiation of the supply;
• the one who pays for the services;
• the one who contracts for the supply;
• if more persons than one satisfy the conditions set forth I clause (a), the person who appears most on that list; and
• if it is not possible for the supplier to identify, for whatever reason, the type or kind of supply or the real location of any of the listed persons, such a supply or all the supplies of telecommunications services made to such kinds of recipients shall be treated to have been made to the place where the actual or real residential or commercial address of the recipient of the tax invoice from the supplier is located.

18. Registered Supplier and registered recipient.—Notwithstanding anything contained in section 17, a supply of services by a registered non-resident to a registered recipient shall be treated to have been made in Bangladesh, if—

• the recipient of the supply carries on an economic activity from or through a fixed place in Bangladesh; and
• the supply is made for the purposes of that economic activity or to that fixed place.

19. VAT Agent of non-residents.—(1) A non-resident, who does not carry on an economic activity from a fixed place in Bangladesh, shall appoint a VAT

• Such VAT Agent of a non-resident shall bear all responsibilities and carry out all activities of the non-resident, and shall be jointly and severally liable for the payment of all dues including taxes, fines, penalties, and interests that may be imposed.
• The VAT registration of the economic activities by a VAT Agent shall be in the name of the principal.
• The Board may prescribe the manner, conditions of appointment and the responsibilities of a VAT

20. Imported services reverse charged to recipient.—(1) Notwithstanding anything contained in this Act, supply of any imported service shall be a taxable supply, if—

• the recipient is a person registered or required to be registered and acquires such service in the process of his economic activities; and
• such service is provided in Bangladesh in the process of an economic activity by a person registered or required to be registered, and—
• such service is taxable at a rate other than being zero-rated; and
• such recipient of such service does not get as credit the entire amount paid as VAT.
• Value Added Tax payable by the recipient of a taxable supply of imported services is both output tax and input tax of that person.
• If an adjustment event occurs, or has occurred, in consequence of the supply of imported services, that service would be a taxable supply in consequence thereof and the recipient of such supply of such service shall be treated as the supplier thereof.
• For the purposes of the definition of “imported services”, and of the application of this Act in relation to such services, if a person, registered or required to be registered, carries on economic activities from a fixed place in Bangladesh and from one or more fixed places outside Bangladesh,—
• Such person, in respect of carrying on taxable activities in and outside of Bangladesh shall be treated as two separate persons;
• the person outside Bangladesh shall be deemed to have made to the person inside Bangladesh (as defined for the purposes of this Act) a supply of a service containing some benefits of the nature of services through or as a result of the activities carried on by the person outside Bangladesh;
• the time of the supply shall be determined on the assumption that a supply has been made; and
• the value of the service shall be determined on the assumption that the supply was made by a non-resident outside Bangladesh to an associate in Bangladesh.

21. Zero-rated supplies.—(1) Notwithstanding anything contained in this Act, the following supplies shall be zero-rated, namely—

• any supply specified in section 22 23 and 24; or
• the right to receive zero-rated supplies or supplies related to an option to buy or sell futures..

(2) If a supply is both exempted and zero-rated, it shall be treated as zero­rated and not exempted, under the provisions of this sub-section.

22. Land outside Bangladesh.—A supply of immoveable property shall be zero-rated if the land to which the immoveable property relates is outside Bangladesh.
23. Supply of goods for export.—(1) Supply of any good for export shall be zero-rated:

Provided that the provisions of this sub-section shall not be applicable to the export of any good whether re-imported or intended for re-import.

• The following supplies shall be zero-rated, namely—
• if the good is located outside Bangladesh at the time of supply and such good is not assembled, installed or imported into Bangladesh, by the supplier;
• if the good is supplied anywhere outside Bangladesh after it is imported but before it is entered for home consumption, such good shall be deemed to have been located outside Bangladesh at the time of supply;
• supply of any good to a tourist or to a visitor coming from abroad for consumption outside Bangladesh by any seller holding a licence to sell duty-free goods;
• if the good remains outside Bangladesh during the whole of a prescribed period, its supply on lease, hire, under licence or other supplies relating to the use of such good shall be treated as separate supplies and each such supply shall be zero-rated:

Provided that if such good remains in Bangladesh immediately before and after its stay in international territories, such leased good shall be treated to have remained inside Bangladesh.

• Subject to the following conditions, the supply of a good usable for repair, maintenance, cleaning, renovation, modification, or for any other similar work of any good shall be zero-rated, namely—
• if the good supplied is assembled with, or become part of, such good, or become unusable or damaged in consequence of the assemblage;
• if such good is temporarily imported into Bangladesh under the Customs Act; or
• if such good is brought temporarily into Bangladesh for receiving services, and, after it is received, it is exported from Bangladesh without using it for any purpose in Bangladesh other than receiving the service.
• Subject to the following conditions, a supply of goods for the repair or replacement of a good under warranty shall be zero-rated, namely—
• if such good is supplied under an agreement with the non-resident and unregistered warrantor to the effect that the warrantor would give a consideration; and
• if such good is repaired or replaced without any charge to the owner.
• A good supplied in the course of repair, maintenance, cleaning, renovation, modification, or otherwise physically affecting an ocean-going

ship or an aircraft or any other vessel of the like kind engaged in international transport shall be zero-rated.

• A supply of stores, or of spare parts, relating to an aircraft or an ocean­going ship, engaged in international transport, shall be zero-rated, if the stores or parts are for use, consumption, or sale on the aircraft or the ship during a flight or a voyage.

Explanation: In this section, “stores” means stores for the use of the passengers or crew of an aircraft or of an ocean-going ship, or for the maintenance and repair of such an aircraft or of a ship, and also includes goods for use in the aircraft or ship, fuel, spare parts, tools and the like, whether or not for immediate use.

24. Supply Supplies of zero- rated services.—(1) The supply of a service directly related to any land situated outside Bangladesh shall be zero-rated.

• The supply of a service physically given on a good situated outside Bangladesh at the time when such a service is rendered shall be zero-rated.
• Subject to the following conditions, the supply of a service for the repair, maintenance, cleaning, renovation, modification and the like, of any good shall be zero-rated, namely—
• if such good is temporarily imported into Bangladesh under the Customs Act; or
• if such good is brought temporarily into Bangladesh for receiving a service, and is exported from Bangladesh after the service is given without being used in Bangladesh for any other purpose.
• The supply of a service included in the customs value of an imported good shall be zero-rated.
• The supply of a service shall be zero-rated if it is given outside Bangladesh and is of a kind that is received by an individual at the time and place where it is given.
• Subject to the provisions of sub-section (5), the supply of a service shall be zero-rated, if—
• the recipient of such a supply is—
• a non-resident who stays outside Bangladesh at the time of supply of the service; or
• a resident and receives such service, in effect, staying outside Bangladesh at the time of the supply of the service; and
• such service is not—
• directly related to any land situated in Bangladesh;
• physically given on any good situated in Bangladesh at the time of the supply;
• provided, by global roaming services, to a person temporarily outside Bangladesh..
• The supply of a service shall not be zero-rated under sub-section (4), if—
• such supply of a service relates to the acquisition of a right or option of a subsequent supply (which is neither exempted nor zero-rated) of any other type in Bangladesh;
• such service is supplied under an agreement with a non-resident with a view to supplying the same to a person not registered in Bangladesh.
• The supply of a service outside Bangladesh relating to the filing of a case, its prosecution, conferment of a right, its protection, transfer, transfer of a right, licencing or enforcement of rights for the protection of intellectual property rights shall be zero-rated.
• The supply of a telecommunications service by a telecommunications supplier to a non-resident telecommunications supplier shall be zero-rated.
• The supply of a service in favour of a good under warranty of repair or replacement shall be zero-rated, subject to the following conditions, namely—
• if the supply of such service is made under an agreement with the warrantor to the effect that the warrantor, who is a non-resident and is not a registered person; and
• if such service is provided without any charge to the owner.
• The supply of the following services shall be zero-rated, namely:—
• a supply of services to any international transport;
• a supply of insurance services to the international transport of goods;
• a supply of the services of repair, maintenance, cleaning, renovation, modification, or otherwise physically affecting an aircraft or an ocean-going ship engaged in international transport;
• a supply to a non-resident, who is not registered, of services directly connected to the operation or management of an ocean-going ship or an aircraft engaged in international transport; or
• a supply of stevedoring services.

25. Travel Agent and tour operators.—Notwithstanding anything contained in this Act, the Board may decide if a tourism service, irrespective of whether it is provided in Bangladesh or not, shall be zero- rated or not, and may, in every tax period, formulate rules determining the value, on a general basis, of tourism service that are not zero- rated.

Explanation:      For purposes of this section, “tourism service” means

accommodation, food, tours, entertainment, and similar things commonly provided to tourists or international visitors.

26. Exempted supplies, or exempted imports.—Notwithstanding anything contained in this Act, the following supplies shall be exempted from VAT, namely:—

• any supply or import specified in the first schedule; or
• any supply relating to a right or option to receive an exempted supply.

CHAPTER FOUR
MANNER OF VAT COLLECTION

Part-A: On Imports

27. Manner of VAT collection on taxable imports.—The Commissioner of Customs or the Customs Officer shall collect VAT on the taxable imports in the same manner and at the same time as he collects customs duty on such imports under the Customs Act even if import duty is not imposable on such import.
28. Determination of value of taxable imports.—The value of a taxable import shall be the summation of the following amounts, namely:—

• the value of the goods determined for the imposition of import duty under the Customs Act; and
• the amounts, if any, of customs duty, supplementary duty, or other taxes (other than VAT and advance income tax) payable on the import of the goods.

29. Determination of value of re-imported goods.—Where goods are re­imported after being exported, the value for assessment of VAT on such goods shall be the combination of the value to the extent that it is enhanced as a result of the repair and the expenses incurred on their insurance, freight and landing charges provided that the forms, features, characteristics and the qualitative standards of the goods remain unchanged after such repairs.
30. Imports for exports.—A good brought for export, without being released for consumption inside Bangladesh, shall not be liable to any tax.
31. Payment of advance tax on import and its.—(1) Every registered person or a person required to be registered or an enlisted person, who makes a taxable import for his economic activities, shall make payment of the VAT or turnover tax in advance payable on the supply of his imported goods at the rate specified in sub-section (2).

• An advance tax, at the rate of 3 (three) percent of the value of the taxable import, shall be payable at the same time, and in the same manner as VAT is payable, on a taxable import.
• Every registered or enlisted importer who has made a payment of advance tax may, in the prescribed manner, claim, in the return of the related tax period, a decreasing adjustment equal to the amount paid as advance tax.
• Any person who has paid an advance tax but is neither registered nor enlisted may, in the prescribed manner, make an application to the Commissioner for a refund of such advance tax.
• The Commissioner shall, after receiving such an application, dispose it of in the prescribed manner. ,

Part-B: On General Supplies

32. Determination of value of the taxable supply.—(1) Subject to the provisions of this section, the value of a taxable supply shall be the consideration for such supply, reduced by an amount equal to the tax fraction of that consideration.

• The consideration for a taxable supply of an imported service shall be the value of such supply or, if the supplier and the recipient are related to each other, its fair market price.
• Save and except those determined under sub-section (7), the value of a taxable supply a registered person makes to an associate shall be the fair market price of such supply, reduced by the tax fraction of that price, if—
• such supply is made for no consideration, or for a consideration that is lower than the fair market price; and
• such associate would not be entitled to a credit for all of the input tax arising out of such supply.
• Unless otherwise specified, the value of a taxable supply without a consideration shall be zero.
• The value of any supply other than the taxable ones shall be the consideration for such supply.
• The value of a taxable supply of a sale of residential premises shall be determined in the prescribed manner.
• The value of taxable supply of immoveable property by a partner of a residential premises built under a property development joint venture initiative to a landowner thereof shall be determined in the prescribed manner.

Explanations: In this section,—

• “residential premises” means any premises that are intended to be, or are capable of being, occupied as a residence, and includes any garage, or any similar space; but does not include any premises or part of premises used to provide commercial accommodation; and
• “commercial accommodation” means—
• any hotel, motel, inn, boarding house, guest house, hostel, or similar establishment in which lodging or overnight stay is regularly or normally provided to four or more persons in exchange of money; or

(ii) any other accommodation offered for residential premises for individuals other than as their main or permanent residence; but it does not include any student hostel used as a part of an approved educational institution.

33. Time of payment of VAT on taxable supplies.—(1) The VAT imposed on a taxable supply shall become payable at the time when any of the following activities first occurs, namely:—

• when such supply is made;
• when a tax invoice for such supply is issued; or
• when a part or the whole of the consideration is received.
• Where a progressive or periodic supply is treated as a series of separate supplies, VAT imposed on such supplies becomes payable at the time when any of the following activities occurs first, namely:—
• when separate invoices are issued for each such supply;
• when receivable consideration against each such supply is received in part or in full;
• when the price against the series of supplies becomes payable; or
• the first day of the tax period to which the payable consideration relates, if it is possible to ascertain the payable amount at that time.
• Notwithstanding the provisions of sub-section (2), if a progressive or periodic supply of any good (such as: water, gas, oil or electricity) or a service is made through a distribution network, the imposed VAT shall become payable within 90 (ninety) days from the date on which invoices against each such supply are issued.

34. Progressive or periodic supplies.—(1) Each progressive or periodic supplies shall be treated as a separate supply.

• If each of the progressive or periodic supplies is not readily separable, such supply shall be treated as a series of separate supplies each corresponding to the proportion of the supply to which such separate part of the consideration relates.
• In relation to each part of a supply under a lease or of a right to use any property, the time required continuously over the period of such lease or right of use shall be treated as the time of supply.

35. Single and multiple supplies.—Where a supply consists of more than one element, tax shall be imposed in the following manner, namely-

• every supply shall generally be regarded as distinct and independent;
• a supply consisting of the characteristics of a single supply from an economic point of view shall not be artificially split;
• the essential features of a transaction shall be ascertained to determine whether the supply is single or more than one distinct supply;
• the supply, if constituted with one or more elements, shall be a single supply, and other elements shall be regarded as part of such a single supply;
• a supply shall be regarded as ancillary to a principal supply, if it is not considered as the principal matter by the recipient himself, but merely as a means for better enjoyment of the principal supplied matter.

Part- C: On Special Supplies

36. Sale of an establishment as a going concern.—(1) Where a person transfers an establishment in Bangladesh as his running business in the process of an economic activity, such transfer shall be treated as a single supply and such single supply shall not be regarded as a supply made in Bangladesh.

• In the matter of applicability of the provisions of sub-section (1) the running business establishment has to be acquired with an intent to keep the economic activity going after its sale is effected and the purchaser has to fully acquire all that is necessary for an uninterrupted management of the economic activity thus transferred.
• If a part of a running business establishment is capable of being operated separately, such part shall be regarded as a separate economic activity.
• In the matter of applicability of the provisions of sub-section (1), for the purposes of working out the supplier’s entitlement to input tax credits,—
• the input tax paid on a service taken up for transfer shall be determined in continuation of other activities of the supplier; and
• the value of a transfer shall not be included in the proportionate credit ascertained under section 47.
• No person shall transfer a running business establishment without making full payment of all payable taxes and arrear dues.
• Notwithstanding the provision of sub-section (5), a Commissioner may, subject to such conditions and such limitations as may be prescribed, permit a transfer, if the purchaser submits an unconditional bank guarantee from a scheduled bank for full payment of all payable taxes arrear dues.
• Under the provision of sub-section (1), the purchaser shall be treated as the successor to the supplier from the date of the transfer and the supplier shall provide the purchaser with the information necessary to properly comply with the provisions of this Act, and the Board may make such rules as are necessary to make sure that the supplier provides such information.

37. Rights, options, and vouchers.—(1) Where a right or an option is exercised, the consideration for a supply made through an exercise of such right or option shall be equal to the remainder, if any, of the consideration given for such supply.

• Where a voucher is accepted as payment, in part or in full, for a supply; the consideration for such supply shall be the remainder of the value after subtracting the value of such voucher.
• Where the supply of a voucher is not a taxable supply, the provision of sub-section (2) shall not apply.

Explanation: In this section, “voucher” means any given receipt ticket, acknowledgement receipt or any similar document issued electronically the bearer whereof acquires the right to have the supplies of any good, service, or immoveable property, but does not include a postage or revenue stamp.

38. Supply of prepaid telecommunications products or services.—(1)

Where a telecommunications supplier supplies a prepaid telecommunications product or a service at a discount to a telecommunications intermediary, the consideration for such a supply shall be assessed inclusive of the discount:

Provided that in relation to a supply of telecommunications product or service by one supplier to another, the provision of sub-section (2) shall not be applicable.

• Where a telecommunications intermediary buys and on-sells a prepaid telecommunications product, such sale shall not be treated as a taxable supply.
• Where a telecommunications supplier supplies a prepaid telecommunications product or a service through its agent, the consideration for such a supply by the telecommunications supplier shall be assessed inclusive of the commission paid to such agent.
• The distribution of a prepaid telecommunications product by a telecommunications supplier or by a telecommunications intermediary acting as an agent of another telecommunications intermediary, shall not be treated as a taxable supply under this Act.
• A telecommunications supplier who supplies a prepaid telecommunications product and pays VAT in compliance with the provisions of this section may claim a decreasing adjustment, if—
• the face value, in part or in full, of the product is used to purchase something from a person other than the telecommunications supplier;
• the other person—
• makes the supply through an economic activity carried on in Bangladesh; or
• is registered; and
• the telecommunications supplier pays an amount of money to such other person in respect of such a supply.
• The amount of the decreasing adjustment shall be equal to the tax-fraction of the amount paid to that other person, and the adjustment shall be made in the tax period in which the payment is made.
• The Board may frame rules prescribing the means of a proof of a right to an input tax credit and the manner of claiming tax credit thereof for a person who uses a prepaid telecommunications product or a service.

Explanations: In this section,—

• “prepaid telecommunications product” means a phone card, prepay card, recharge card, or prepayment for acquisition of telecommunications goods by other means, or airtime for telecommunications services, in whichever form or by whatever name called, including internet access time, or download capacity;
• “telecommunications intermediary” means a person who acts as a distributor, representative, VAT agent, or an intermediary in relation to a prepaid telecommunications product;
• “telecommunications supplier” means a supplier of telecommunications services, but does not include a telecommunications intermediary; and
• “telecommunications service” means a service relating to transmission, emission, or reception of signals of writings, projection of images, sounds, or information of a similar kind by wire, radio, optical, or other similar electromagnetic or electronic signalling system,—

And the following would also be included in it, namely,—

• such transfer or assignment service of the right to use capacity for such transmission, emission, or reception of signals; and
• the service containing the provision of access to global or local information networks;

but does not include the service of supply of underlying writings, images, sounds, or information.

39. Lotteries, lucky draws, housie, raffles, and similar undertakings.—(1)

Where a person runs a lottery, lucky draw, housie, raffle, or similar undertaking, the consideration for tickets (by whichever name described) sold by such person shall be the price of the ticket.

• The price of the tickets sold at a discount to distributors or agents shall be calculated exclusive of the discount.

Explanation: In this section, “price of the ticket” means the amount of money payable by the buyer, who holds the ticket with a desire to win, and participates in the undertaking.

40. Value of in-kind benefits given to an employee or officer.—(1) Where a person, registered or required to be registered, makes a supply of an in-kind benefit in
    lieu of cash to any of his employees or officers, such a supply shall be treated to have been for personal ends; the price of such in-kind benefits shall be taxable.

• Where a person, registered or required to be registered, supplies to any of his officers or employees a service or an immovable property without a consideration or at a price less than the fair market price, the value of such service or such immovable property shall be its fair market price.

Lay-by sales.—(1) Where a supply of goods is made under a lay-by

• the output tax on such supply shall become payable when payments for such supply are made and, in each tax period, taxes shall be assessed and paid at the time of payment of the price; and
• the amount of assessed output tax in each tax period shall be the tax- fraction of the payments made in that period.

(2) Where a supply of any good is made under a lay-by agreement, separate tax invoices shall be required to be issued against payment of each instalment.

42. Cancelled transactions.—(1) Where a transaction for a supply is cancelled, and a portion of the consideration previously received is retained by the supplier at the time of returning it, then the tax applicable on the portion thus retained may be adjusted while making adjustments in consequence of the cancellation.

(2) If a transaction for any supply is cancelled, and the supplier realises any money from the recipient as a consequence thereof, that realised money shall be treated as the consideration for the supply in the tax period in which it is realised and taxes shall be payable.

43. Sale of property to pay off a debt.—(1) Where a person (the creditor) takes a supply, by way of sale, of the property of another person (the debtor) in full or partial settlement of a debt owed by the debtor to the creditor,—

• the supply shall be deemed to have been made by the debtor;
• the creditor shall be liable to pay the taxes, if any, payable on the supply; and
• After payment of the debt and other debts, payable Value Added Tax shall be liable to be deposited on a priority basis before any surplus money may be returned to the debtor.
• The debtor and the creditor shall be jointly and severally liable for the payment of the taxes.
• The Board may prescribe the conditions for, and the manner in which, an unregistered creditor may pay Value Added Tax under the provisions of this section.

44. Vending machines.—(1) Where a taxable supply of any goods is made through a vending machine, meter, or other similar automatic devices (other than a pay telephone) that are operated by coins, note or tokens, the tax shall become payable at the time when the coins, notes or tokens are taken out from such vending machines, meters, or other automatic devices by the supplier or any person on his behalf.

(2) Where a taxable supply is made through a vending machine, meter, or other automatic devices, and payment for such supplies is made in a prescribed manner tax shall become payable at the time when the recipient of such supply makes the payment to the supplier.