The Value Added Tax (VAT) system in Bangladesh is an essential aspect of the tax framework, meant to enhance revenue generation while ensuring transparency in tax collection. Implemented in 1991, the VAT system operates under the authority of the National Board of Revenue (NBR). This consumption tax is levied on the value added to goods and services at each stage of production and distribution, making it a crucial component for businesses and consumers in the country.

VAT applies to a wide range of products and services, encompassing everything from retail goods to professional services. Under the VAT system, businesses are required to charge VAT on their sales while being able to reclaim the VAT on their purchases. This mechanism minimizes the cumulative taxation effect and ensures that tax is applied only to the value added at each stage of the supply chain. Currently, the standard VAT rate in Bangladesh is 15%, although there are varying rates applicable to specific categories of goods and services, including exemptions for certain essential items.

The registration process for VAT is vital for businesses operating in Bangladesh. Enterprises whose annual turnover exceeds the prescribed threshold must register for VAT with the NBR. This includes obtaining a VAT registration certificate, ensuring compliance with specific record-keeping practices, and filing periodic VAT returns, usually on a monthly basis. Maintaining accurate documentation and timely submission of returns is crucial for compliance and avoiding any penalties.