Guidelines for withholding VAT and VAT rate for the F.Y.2019-2020 under the Value Added Tax (VAT) and Supplementary Duty (SD) Act 2012 (As amended 7 July 2019) Compiled by: Masum Gazi Senior Assistant Manager ‘Taxation and Corporate Affairs ACNABIN Chartered Accountants e-mail: masumgazi613@ gamil.com Contact: +8801935-131132 1. Withholding entity: As per SRO, No, 235-Law/2019/71-Mushak, dated: 30 June 2019, the following persons shall be treated as “Withholding Entity” namely: + Ministry, board, authority, semi-government, autonomous body, state owned entity, local authority or similar types institutions; + Non-government organization approved by the NGO Affairs Bureau or the Directorate General of Social Welfare; ¢ Bank, insurance or similar financial institutions; and Any limited company. 2. Rate of withholding VAT (VDS): As per SRO, No. 235-Law/2019/71-Mushak, dated: 30 June 2019, If the services mentioning in the below table are provided to any withholding entity, then the withholding entity shall withhold the following VAT amount: * Incase of 15% VAT, no withholding shall be required. * Incase of reduced or specified VAT rates, the withholding VAT amount shall be the fall amount of VAT. 3. Applicability of withholding VAT in some other cases: * In case of service imports from outside Bangladesh, full VAT amount shall be deducted by bank which is involved for payment for such services. Ifpurchaser bank paid bill amount on behalf of purchaser through internal letter of credit or any other means then such bank shall deduct full VAT amount and shall deposit the deducted amount to Government Treasury on behalf of its customer, * Government, Semi-Government, Autonomous Body and Local Authority shall deduct 15% VAT at the time of issuing and renewing of licenses. * Place and establishment tenant shall deduct 15% VAT on rent amount, 4. Non-applicability of withholding VAT: * Withholding VAT shall not be applicable for the supply of utilities like fuel, gas, water (WASA), electricity, telephone, and mobile bill. Page 1 of 6 Compiled by: Masum Gazi5. Requirements to be done by withholding VAT Authority ‘* Withholding VAT authority shall not take any service or make any payment to a supplier, if supplier does not provide integrated tax invoice and withholding tax certificate (Mushak-6.3), © Withholding authority shall deposit the deducted amount to the Government treasury within 15 working days from the date of payment to supplier. 6. Punishment for failure to deduct: ‘* In case of failure to deduct at source and depositing the deducted amount to government treasury, both withholding authority and supplier shall be jointly and severally liable. ‘* Shall pay deducted amount with half yearly 2% interest. ‘* Ifdeducted VAT 1s not deposited to the government treasury within stipulated time limit, such person shall be penalized amounting BD 25,000. Rate of VAT Description of services $001.20 (Except all temporary hotel & restaurant in Bangladesh. Temporary restaurant means, | restaurant without surrounding, electricity | fan and having not more than two electric | light) "1 Construction Contractor | [Except-a) construction work carried out relating to contract signed on or before 30 $004.00 June 1991; and |b) Work carried out based on tender issued on | “or before 30 June 1991 and contact signed | “until 30 June 1993] # HE Storehouse (Warehouse) and Port $005.00, $005.10 __ Storehouse (Warehouse) $007.00 | Advertising Firm (Except dead news) Page 2 of 6 ‘Compiled by: Masum Gazi$008.10 $008.20 $010.00 $010.20 $011.00 $012.00 $012.12 $012.14 $015.20 $018.00 $021.00 $023.10 $027.00 Description of services Printing Press (Except books, Journal & Binding (All kinds of bindings)" | Exempted i Land Development Organization and Building Construction Organization: Video cassette shop, Video game shop, Audio video recording shop, Video and Audio CD renting shop_ Internet Agency (Except providing internet to educational institution) "! ight Clearing & Forwarding Agency Plant and Capital Equipment Rent Providing Organization Cinema Hall TEs Page 3 of 6 ‘Compiled by: Masum Gazi5028.00 $031.00 $032.00 $037.00 $038.00 $039.10 $040.00 $043.00 $044.00 $047.00 $048.00 Description of services going Bangladeshi ship; b) Premium paid by private sector power generation company; c) Premium paid for aviation co-insurance in foreign currency; mn] Courier and Express Mall Service ity Pi Repairing or servicing of taxable goods in exchange of money by a person, organization oragengy (Except service provided to non-withholding ty)" Consultancy and supervisory firm — Procurement provider (Except supplying school Tiffin, supplying books for School & College level education | against tender of national education and | textbook board, Supplying Exalt, Waste & | scrap paper, cullet, plastic wastage, using of | bone of cow & mohish as input of gelatin | Capsule & supplying Jute products) “t Organizer of cultural program by foreign artist Security Services Television and online broadcast program provider Services Provided by BRTA Organizer of sports ‘Compiled by: Masum Gazi Page 4 of 6Description of services 050.0 Architect, Interior Designers or Interior decorators and Graphic Architect, Interior Designers or Interior SOS010 | an retars $051.00 | Engineering firm 054,99 _ Advertisement Broadcasting agency through Satellite channel | $057.00 | (Except electricity used in irrigation and cold | $060.00 org Tailoring shop and tailors $063.00 (Exempt all tailoring shop except air- conditioned tailoring shop & tailors) Picnic, Tourism and hooting place and establishment including historical place $065.00 $070.00 071.00 $072.00 5073.00 | Manpower export organization [Except a) factory rent paid by registered or listed producer & manufacturer; |b) fully used for residential purpose and in $074.00 case of using for commercial purposes no | | more than 150 sq feet; | | o} rent paid by IT enable service organization | registered under service code $099.10; and | Page 5 of 6 ‘Compiled by: Masum GaziDescription of services $076.00 Op Seller of Readymade Garments a) Selling of readymade garments having $078.00 | own brand |b) Selling of readymade garments without having own brand Other Miscellaneous services | | $099.20 (except service related to gray fabrics dying, finishing and calendaring) Meditation Services Key Note: © ‘1 Represents services that are exempted from VAT by SRO # 172-Law/ 2019/29- Mushak, dated: 13 June, 2019. ‘+ Reduce rate VAT Is introduced by inserting new schedule “Schedule-3” in the VAT and SD Act 2012 through Finance Act 2019. ‘* Ifany change is made by NBR afterward then that shall be prevailed, If you have any query relating to Tax & VAT or required any Tax & VAT related services you can communicate with me by e-mail at masumgazi613@gmail.com or by mobile at +8801935-131132. Thank You Page 6 of 6 ‘Compiled by: Masum Gazi