VAT, Tax & Customs Law Firm in Dhaka | Kazi Law Chamber

Bangladesh's fiscal regulatory environment has undergone significant structural change in recent years. The Income Tax Act 2023 replaced the Income Tax Ordinance 1984 and introduced a substantially rewritten framework for corporate and personal taxation. The VAT and Supplementary Duty Act 2012 and the VAT and SD Rules 2016 govern the VAT regime, which applies at a standard rate of 15% on most supplies of goods and services. The Customs Act 2023 replaced its predecessor legislation and introduced new provisions on advance rulings, valuation methodology, and the Authorised Economic Operator framework. The Bangladesh Single Window system became fully operational in 2025, integrating customs clearance across multiple regulatory agencies through a centralised online platform. These changes have created both new compliance obligations and new strategic opportunities for businesses seeking to manage their tax exposure more effectively.

Kazi Law Chamber regularly advises clients on navigating this environment with precision, drawing on a practice that includes genuinely complex mandates across customs classification, cross-border VAT structuring, income tax assessment disputes, and penalty proceedings before the Customs, Excise and VAT Appellate Tribunal.

The Bangladesh Tax and Customs Framework

Three principal regulatory authorities govern the tax and fiscal compliance environment for businesses operating in Bangladesh. The National Board of Revenue is the central authority for tax administration, responsible for income tax, VAT, customs duties, and supplementary duties, and for the formulation and enforcement of tax policy. The Customs, Excise and VAT Appellate Tribunal, commonly referred to as CEVAT, is the statutory appellate body for customs and VAT disputes that have passed through first-level Commissioner of Appeals review or, in certain cases, are directly appealable to the Tribunal. The High Court Division of the Supreme Court of Bangladesh exercises supervisory jurisdiction over the tax authorities through writ jurisdiction, and provides the avenue for challenging assessment orders, penalty determinations, and regulatory decisions that are unlawful on their face or procedurally flawed.

Understanding which forum applies to a given dispute, at what stage, and under what procedural conditions, is a prerequisite to effective tax dispute strategy. Many tax disputes in Bangladesh are lost not on their merits but because the applicable procedural route was incorrectly identified or inadequately prepared. Kazi Law Chamber advises clients on forum selection, pre-deposit requirements, appeal filing timelines, and the strategic sequencing of proceedings from initial assessment through to judicial review.

Customs Duty, HS Code Classification, and Import Compliance

Customs duty compliance in Bangladesh is governed by the Customs Act 2023, the First Schedule of the Customs Tariff, and a range of supplementary notifications and statutory regulatory orders issued by the National Board of Revenue. The total import duty burden on a given product depends on the combination of customs duty, VAT, supplementary duty, regulatory duty, advance income tax, and advance trade VAT applicable at the point of import, all of which are determined in part by the HS Code under which the product is classified. Incorrect or suboptimal HS Code classification can result in sustained overpayment of duties, regulatory exposure for under-declaration, or both.

HS Code classification disputes are among the most technically demanding customs matters in Bangladesh, particularly for technology products, specialised equipment, and goods that fall across multiple product categories under the Harmonised System. The Customs Act 2023 provides a mechanism for advance rulings from the National Board of Revenue, allowing importers to obtain prospective classification certainty before shipment rather than litigating the correct classification after customs authorities have already made a determination.

Kazi Law Chamber advises on the full range of customs duty and import compliance matters, including:

• Analysing the applicable HS Code classification for imported goods under the Harmonised System and the Bangladesh Customs Tariff
• Advising on the combined duty burden applicable to specific products, including customs duty, VAT, supplementary duty, regulatory duty, advance income tax, and advance trade VAT
• Identifying defensible alternative classification strategies where the dominant function or technical nature of a product supports classification under a lower-duty heading
• Advising on and filing applications for statutory advance rulings from the National Board of Revenue to obtain prospective classification certainty
• Advising on functional disaggregation of composite products to reflect the dominant purpose of individual components under different HS sub-headings
• Advising on LC description and import documentation restructuring to ensure consistency between documentary characterisation of goods and their applicable classification
• Advising on duty refund and adjustment mechanisms for duties already paid under an incorrect classification
• Advising on bonded warehouse arrangements for 100% export-oriented manufacturing and the applicable duty exemption regime
• Advising on Authorised Economic Operator status under the AEO Rules 2024 and the operational and compliance benefits available to qualifying importers
• Representing clients in customs valuation disputes, including cases where customs authorities reject the declared transaction value and apply alternative valuation methods
• Representing clients in customs duty disputes and classification challenges before the customs appellate hierarchy and CEVAT
  
  

We have advised a Finland-headquartered technology company's Bangladesh affiliate on a complex customs classification and duty optimisation matter involving proprietary telecommunications software imported through letters of credit and declared in a manner that attracted customs duty of approximately 29%. Our advice covered HS Code reclassification based on the dominant functional purpose of the software, advance ruling strategy, LC documentation restructuring, and the feasibility of refund mechanisms for duties already paid, providing a phased, regulator-aligned approach to reducing the client's duty exposure without disrupting telecommunications operations or creating regulatory risk with the NBR, BTRC, or Bangladesh Bank.

Customs Penalty Proceedings and CEVAT Appeals

Customs penalty proceedings in Bangladesh arise from a range of regulatory triggers, including misdeclaration of goods, undervaluation, classification disputes, documentation deficiencies, and breach of conditions attaching to duty exemptions or bonded warehouse licences. Penalty orders are issued by the relevant Commissioner and are subject to appeal before the Commissioner of Appeals and thereafter to CEVAT, with certain orders appealable directly to CEVAT without the intermediate Commissioner of Appeals stage depending on the nature and level of the order.

Defending customs penalty proceedings effectively requires both a sound understanding of the substantive customs law and a technically precise approach to the procedural requirements of the appellate system. Pre-deposit requirements, filing deadlines, and the documentary record before the authority at the time of the original order all bear on the strength of an appeal and the available grounds of challenge.

Kazi Law Chamber advises on and represents clients in customs penalty proceedings and appeals, including:

• Advising on the grounds of challenge available against a customs penalty order and the applicable procedural route for appeal
• Preparing and filing appeals before the Commissioner of Appeals and before CEVAT
• Advising on hardship applications for reduction or waiver of pre-deposit requirements where the full pre-deposit would cause demonstrable financial hardship
• Structuring arguments on procedural irregularities, incorrect application of valuation methodology, misdirection on classification, and disproportionate penalty quantum
• Coordinating with customs agents, freight forwarders, and the relevant Customs House in managing the practical aspects of ongoing penalty proceedings

We are currently advising on customs penalty appeals arising from orders passed by a Commissioner of Customs that are directly appealable to CEVAT, and separately handling a related matter arising from an order passed by an Additional Commissioner that proceeds through the Commissioner of Appeals before reaching the Tribunal.

VAT Compliance, Advisory, and Dispute Representation

The VAT and Supplementary Duty Act 2012 imposes a standard rate of 15% VAT on most taxable supplies of goods and services in Bangladesh. Businesses registered for VAT are required to file monthly returns in Form Mushak 9.1, maintain VAT accounts and issue VAT invoices in the prescribed format, and deduct VAT at source on applicable payments under the VDS mechanism. VAT disputes frequently arise from disagreements over input tax rebate eligibility, output tax calculation, VAT deducted at source and its credit against output liability, supplementary duty classification, and the application of VAT to cross-border service arrangements under the reverse charge mechanism.

Kazi Law Chamber advises on VAT compliance and disputes including:

• Advising on VAT registration and enlistment obligations based on annual turnover thresholds
• Advising on input tax rebate eligibility and the conditions under which rebate claims may be denied or reduced
• Advising on VAT treatment of cross-border service imports, including the reverse charge mechanism applicable to services received from non-resident suppliers
• Advising on supplementary duty classification and the applicable rates for specific goods and services
• Advising on Advance Trade VAT on imports and its treatment against output VAT liability
• Advising on VAT implications of business model changes, including scenarios where structural alterations affect zero-rating eligibility or supplementary duty exposure
• Representing clients in VAT dispute proceedings before VAT Commissioners, the Commissioner of Appeals, and CEVAT
• Pursuing VAT dispute resolution through the statutory ADR mechanism where commercial settlement is preferable to prolonged litigation
• Challenging unlawful VAT demands and penalty orders through writ proceedings before the High Court Division
  
  

We have advised a foreign-invested company on the VAT implications of three alternative business models for cross-border ticketing and payment arrangements, identifying the VAT exposure associated with each structure and advising on the model that best preserved the client's existing tax incentives while remaining defensible under the applicable regulatory framework.

Income Tax Advisory and Dispute Resolution

Corporate income tax compliance in Bangladesh involves a range of ongoing obligations under the Income Tax Act 2023, including filing of annual returns, advance tax payments, withholding tax deductions and deposits on applicable payments, maintenance of accounts in a form acceptable to the tax authority, and participation in assessment proceedings initiated by the Deputy Commissioner of Taxes. Where an assessment is disputed, the matter proceeds through the Commissioner of Taxes (Appeals) and then to the Taxes Appellate Tribunal, with High Court reference available on questions of law.

Kazi Law Chamber advises on the full spectrum of income tax matters, including:

• Advising on corporate income tax obligations, rates, and available exemptions under the Income Tax Act 2023
• Advising on withholding tax obligations on payments to contractors, service providers, and non-residents, including the applicable rates and the consequences of non-deduction
• Advising on the tax treatment of cross-border payments including royalties, technical fees, management fees, and interest, and the interaction between domestic withholding obligations and applicable double taxation treaties
• Advising on income tax implications of corporate restructuring, mergers, demergers, and asset transfers, including the merger-related capital gains tax relief provisions under the Eighth Schedule of the Income Tax Act 2023
• Advising on transfer pricing risks arising from related-party transactions in cross-border corporate group structures
• Advising on IT and ITES tax incentives, eligibility conditions, and the risk of losing incentive status through structural or operational changes
• Representing clients in assessment proceedings, objections to assessment orders, and appeals before the Commissioner of Taxes (Appeals) and the Taxes Appellate Tribunal
• Challenging unlawful or arbitrary tax assessments through writ proceedings before the High Court Division
• Advising on tax clearance certificates, residency certificates, and related compliance documentation
  
  

We have analysed income tax risks, withholding tax exposure on remittances, and IT and ITES tax incentive preservation for a foreign-invested technology company operating in Bangladesh under a multi-layered cross-border services arrangement, providing structured advice that enabled the client to select a compliant operating model while protecting existing incentive entitlements and minimising future enforcement exposure.

Transfer Pricing and Cross-Border Tax Structuring

Transfer pricing risk arises wherever a business in Bangladesh engages in transactions with related parties in other jurisdictions, including intra-group service arrangements, royalty payments, management fee charges, intercompany loans, and the purchase or sale of goods between connected entities. Where the NBR takes the view that the pricing of such transactions does not reflect arm's length terms, it may reassess the taxable income of the Bangladesh entity upward, generating a tax liability significantly in excess of what was anticipated. Transfer pricing reassessment risk is heightened in cross-border arrangements involving technology, intellectual property licensing, and centralised service functions.

Kazi Law Chamber advises on transfer pricing risk in the context of cross-border transactions involving Bangladesh entities, including identifying the applicable transfer pricing provisions under the Income Tax Act 2023, assessing the risk of reassessment in the context of specific related-party arrangements, and advising on structuring options that reduce exposure while preserving the commercial rationale of the arrangement. We have identified and advised on transfer pricing reassessment risk in the context of a cross-border ticketing and payment arrangement between a Bangladesh entity and its Japanese parent company, forming part of a broader business model advisory that assessed tax, VAT, and foreign exchange implications simultaneously.

Tax Implications of Foreign Exchange and Cross-Border Remittances

Companies remitting funds outside Bangladesh, whether as dividends, royalties, technical fees, service fees, or loan repayments, must navigate a combined framework of income tax withholding obligations, foreign exchange controls administered by Bangladesh Bank, and any applicable double taxation treaty provisions. Structuring these remittances incorrectly creates withholding tax exposure, potential gross VAT liability on services received from non-residents, and the risk of regulatory challenge to the remittance itself.

Kazi Law Chamber advises on the tax and regulatory dimensions of cross-border remittances, including withholding tax rates applicable to specific payment categories, the availability of double taxation treaty relief, VAT implications of imported services, and the Bangladesh Bank foreign exchange approval requirements that interact with the tax framework.

Alternative Dispute Resolution in Tax and Customs Matters

The statutory framework for tax and customs disputes in Bangladesh now provides for ADR as an alternative to continued litigation before the appellate tribunals and courts. ADR proceedings are conducted through facilitators, typically retired government officials, lawyers, or chartered accountants, and can result in a binding settlement that resolves the dispute at a fraction of the cost and time of full appellate litigation. ADR is available at specific stages of the dispute process and requires careful assessment of whether a proposed settlement represents a commercially rational outcome compared to the likely result of continued proceedings.

Kazi Law Chamber advises on the availability and suitability of ADR in specific tax and customs disputes, prepares clients for ADR proceedings, and assists in negotiating and documenting settlements reached through the ADR mechanism.

Why Choose Kazi Law Chamber for VAT, Tax and Customs Matters

Kazi Law Chamber's tax and customs practice is grounded in substantive transactional and dispute work rather than routine compliance processing. Our lawyers have advised on complex HS Code classification matters involving proprietary technology products, structured multi-scenario tax analyses across alternative business models for foreign-invested companies, managed customs penalty appeals before CEVAT, and identified and advised on the transfer pricing, VAT, and withholding tax dimensions of cross-border service arrangements involving parent companies in Japan, Finland, and other jurisdictions. We understand that tax advice at the level businesses require is not simply about stating what the law says. It is about identifying where the risks sit, what the available options are, and how to structure a position that is both commercially sound and defensible before the relevant authority.