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Bangladesh

Bangladesh

Bangladesh - Summary of the VAT exempted services to 100% export oriented companies, EPZ companies and 100% deemed export

KPMG in Bangladesh summarizes VAT exemption for service providers as well as the procedures needed for considering their services as VAT exempted.

Application of VAT exemption services received by export oriented entities:

There was a Statutory Regulatory Order (SRO) in this regard in force since 2005. Initially, there were only few services made exempted for VAT for 100% export oriented companies. As the time has gone by, National Board of Revenue (NBR) has time to time added new services to the original SRO to give the facility to the 100% export oriented companies. Latest additions include the “lab test charge” which is one of main services of lab test services provider entities in Bangladesh. Please note that there are 2 special points mentioned in SRO which should be followed by the service providers to consider their services as VAT exempted. These special 2 points have been highlighted as below:

1)    This SRO has 3 Tables such Table –1, Table – 2 and Table 3. The services listed in table 1 and table 2 will be considered as VAT exempted once it will be used in the production of goods of 100% export oriented companies, EPZ companies and 100% deemed export. On the other hand, the services listed in table 3 will be considered as VAT exempted once it will be used in import of raw materials to be used in export and export of finished goods.

2)    There is a condition as prescribed in the original SRO that the organizations which are eligible to get exemption of its services under this SRO, it must follow certain procedures as issued by NBR through an order in exercise of rule 38 of the VAT Rules 1991. In the context of the original SRO, NBR has already issued an Order to prescribe the procedures to be followed by the service providers for enjoying VAT exemption to the listed services of the original SRO.

The summary of the VAT exempted services to 100% export oriented companies, EPZ companies and 100% deemed export are given as below: 

List of the goods or

 

services to be considered

as VAT exempted

NBR prescribed method

under rule 38 of VAT Rules,

1991 in order to

obtain this Exemption

SL

Description of

Goods & Services

Reference of

SRO No. 154

Dated 9 June,

2005

Rateof

Exemption

Procedures
1 Natural Gas Table No- 1 80%

Prior permission and certification is required

from the Concerned commissioner

2 WASA Table No- 2 60%
3 Electricity Distribution Table No- 2 80%
4 Port Table No- 3 100%

As per prescription of NBR, service provider

is required to check the certain documents

such as VAT registration, permission of

Bangladesh Investment Development Authority (BIDA),

membership of Exporters’ Association, etc.)

5 Freight Forwarder Table No- 3 100%
6 Clearing & Forwarding Table No- 3 100%
7 Insurance company Table No- 3 100%
8 Shipping Agent Table No- 3 100%
9 Procurement provider Table No- 2 100% No prescribed guidance from NBR
10 Transport contractor Table No- 2 100% No prescribed guidance from NBR
11 Security services Table No- 2 100% No prescribed guidance from NBR
12 Imported Services Table No- 2 100% No prescribed guidance from NBR
13 Lab testing services Table No- 2 100% No prescribed guidance from NBR
14 Rent-a-car services Table No- 2 100% No prescribed guidance from NBR
15

Information &

technology based

services

Table No- 2 100% No prescribed guidance from NBR
16

Worker welfare &

entertainment

expenses

Table No- 2 100% No prescribed guidance from NBR
1000

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