CHAPTER 4 VAT ON IMPORTS 1. Payment and collection of VAT on imports.

(1) VAT payable on taxable imports shall be paid (a) if the goods are entered for home consumption under the Customs Act, 1969: at the same time and place, and in the same manner, as if it were a duty of customs payable under that Act; and in any other case where goods are imported for use in Bangladesh: on the day the goods are brought into Bangladesh.

(b)

(2) The liability to pay VAT on taxable imports arises by operation of this section and does not depend on the making of an assessment of the amount of VAT due by the Commissioner of Customs. (3) The Commissioner of Customs (a) (b) shall collect the VAT due under this Act on an import of goods, including any advance tax payable under section 5; and shall, at the time of import, obtain the name and VRN (if any) of the importer, the import declaration for the import, and the amounts relevant to the determination of the value of the import; and may make arrangements for such functions to be performed in respect of imports through the postal services.

(c)

(4) Unless a contrary intention appears, in relation to goods imported into Bangladesh, the provisions of the customs laws apply, so far as they are relevant, and with such exceptions, modifications, and adaptations as are necessary, as if the VAT payable on imports were an import duty. 2. Value of Import. Unless otherwise specified, the value of an import of goods is the sum of (a) (b) the value of the goods for the purposes of customs duty under the customs laws, whether or not duty is payable on the import; to the extent not included under paragraph (a) (i) the cost of insurance and freight incurred in bringing the goods to Bangladesh; and

(ii)

the cost of services that have been treated as part of the import of the goods because of section Error! Reference source not found.(2); and

(c)

the amounts, if any, of customs duty, supplementary duty, or other tax, levy, fee, or fiscal charge (other than VAT and AIT) payable on the import of the goods.

3.

Value of returning goods.

Where goods are re-imported after being exported for the purpose of undergoing repair, renovation, or improvement, the value of the import of the goods is the amount of the increase in their value that is attributable to the repair, renovation, or improvement process, and the cost of related freight and insurance so long as the form or character of the goods has not been changed by the repair, renovation, or improvement. 4. Import without entry for home consumption.

An import of goods is not taxable if the goods are entered for export without first being entered or cleared for home-consumption. 5. Advance payment at time of import.

(1) A registered or enlisted person who makes a taxable import shall make an advance payment (referred to in this Act as advance tax) for the VAT or turnover tax that may become payable by the person on (a) in the case of a registered person: (i) (ii) (b) a subsequent supply of the goods imported; or other supplies that will be made by the person using or incorporating the goods imported; or

in the case of an enlisted person: turnover tax that will be payable by the person.

Note: Advance payment is not required for imports made by private persons (i.e. where the import is not made in the course of an economic activity). Such imports are rare and occur mostly when travellers bring accompanied baggage into Bangladesh.

(2)

The advance tax shall be payable (a) (b) at the rate of 3 (three) percent of the value of the taxable import; and at the same time and place, and in the same manner as the VAT is payable on the taxable import.

Adjustments for tax paid in advance. (3) A registered person who has made a payment of advance tax under this section is allowed a decreasing adjustment equal to the amount paid. (4) The adjustment shall be made in the VAT return for the tax period in which the advance tax is paid.
Note: VAT paid in advance is a pre-payment of, and not in lieu of, output tax that will become payable by the registered person. Thus, the person is allowed an adjustment for the amount prepaid. Advance payment of VAT therefore acts as an incentive for taxpayers to file returns and comply with their VAT obligations. Note 2: In the rare case where advance tax is charged to an enlisted person, that tax reduces the amount of turnover tax payable by the person: see section Error! Reference source not found.(3).

(5) To avoid doubt, because advance tax is a payment in lieu of future output tax or turnover tax, the adjustment for advance tax is not an input tax credit and is not subject to the restrictions or limitations in Part C of Chapter 7. (6) A person who has paid advance tax and who is neither a registered person nor a person required to be enlisted for turnover tax may apply to the Commissioner for a refund of the advance tax paid.
Example 1: Zakia imports a car in the course of carrying on her economic activity, which is a fitness and beauty spa for women. At the time of import, Zakia must pay 15% VAT on the car and 3% advance tax in lieu of future output tax. Zakia is not allowed an input tax credit for the car because such credits are denied under section Error! Reference source not found.(4)(a). Zakia is allowed a decreasing adjustment for the 3% advance tax because this was a prepayment of future output tax payable on the supplies made at the spa.

Example 2: Quasem imports a non-airconditioned mini-bus in the course of carrying on an economic activity involving the supply of local transport services. At the time of import, Quasem must pay 15% VAT on the mini-bus and 3% advance VAT in lieu of future taxes. However, all of Quasems economic activities are exempt (domestic transport being exempt when provided in a mini-bus, so long as it is not airconditioned). This means that Quasem is not required to be registered and is not entitled to apply for voluntary registration: see sections Error! Reference source not found.(3)(a) and Error! Reference source not found.(2)(a). Although Quasem is required to be enlisted for turnover tax, because he only makes exempt supplies, he will generally have no relevant turnover and so no turnover tax to pay. Under subsection (6), Quasem is entitled to claim a refund of the advance tax paid on the import of the mini-bus