Vendor Screening in Bangladesh

Vendor screening is the step most Bangladeshi companies skip until something goes wrong: a supplier whose BIN turns out to be cancelled, an invoice that the VAT office will not accept for input tax credit, or a vendor quietly owned by an employee's relative. A structured check at onboarding costs far less than unwinding any of these later.

This page is for procurement teams, finance managers, foreign buyers and NGOs who need a defensible process for approving new suppliers. It sets out what to verify, which documents to collect, where the checks are done and the warning signs that should stop an onboarding. It also explains how to keep the vendor master clean after approval, because supplier risk changes over time.

Why vendor screening matters in Bangladesh

Three risks dominate. First, tax: input VAT is only creditable against a proper Mushak 6.3 invoice from a registered supplier, and withholding obligations under the Income Tax Act 2023 depend on correctly identifying the payee. Second, fraud: shell suppliers and duplicate bank accounts are a common route for procurement fraud. Third, compliance: foreign-owned companies and donor-funded organisations often have their own anti-bribery, sanctions and conflict-of-interest rules that require documented due diligence.

What a vendor screening check covers

We scale the depth of checks to the value and risk of the relationship. A stationery supplier does not need the same review as a construction contractor or an importer handling your goods.

• Legal existence: RJSC search for companies and registered firms, or trade license verification with the issuing City Corporation, Pourashava or Union Parishad
• Tax identity: BIN status on the NBR VAT online system and e-TIN validity, plus whether the supplier issues Mushak 6.3 invoices
• Ownership and control: directors and shareholders from RJSC filings, cross-checked against your employee and related-party lists
• Sector licences: IRC/ERC for importers and exporters, BSTI certification for mandatory products, DGDA, fire or environmental clearances where relevant
• Bank details: account name matching the legal name, confirmed on supplier letterhead and by a callback
• Capacity and reputation: site visit or photos, client references, litigation or blacklisting information that is publicly available

Documents to request from a new vendor

A short standard checklist avoids repeated back-and-forth. Copies should be current, legible and in the supplier's exact legal name.

• Valid trade license and, for companies, certificate of incorporation and latest Form XII or list of directors
• BIN certificate and e-TIN certificate
• Recent PSR or proof of tax return submission where your policy or the law requires it
• Bank account details on letterhead, signed by an authorised person
• Sector certificates: IRC, ERC, BSTI, or professional registrations as relevant
• Signed vendor declaration on conflicts of interest, related parties and code of conduct

Red flags that should pause onboarding

Not every discrepancy is fraud, but each one below needs an explanation in writing before you issue a PO.

• Name on the BIN, trade license and bank account do not match
• Trade license expired or issued for a different business activity
• Supplier cannot issue a VAT invoice yet charges VAT on its quotation
• Registered address is a residence or cannot be located
• A director or shareholder shares a surname, phone number or address with one of your staff
• Pressure to pay advances to a personal account or to a third party

Ongoing monitoring, not one-time approval

Trade licenses are renewed each financial year, BINs can be suspended and ownership changes. A good vendor screening programme re-checks active suppliers at least annually and on any change of bank details, which is the single most common trigger for payment fraud. We maintain an expiry calendar so renewals are requested before documents lapse.

How the process works

1. Risk-tier the supplierClassify the vendor by spend, category and access to your premises, data or funds to decide how deep the check goes.
2. Collect documentsSend the standard checklist and declaration, and log what is received.
3. Verify with sourcesCheck RJSC records, BIN status and trade license details against official systems or issuing offices.
4. Ownership and conflict reviewMap directors and shareholders and compare them with your related-party and employee data.
5. Report and recommendIssue a short screening report rating the vendor as approved, approved with conditions, or not approved.
6. Schedule re-checksRecord document expiry dates and set annual or event-based reviews.

Typical timeline: A standard check is usually completed within a few working days of receiving documents; enhanced checks with site visits or RJSC certified copies take longer and depend on the supplier's responsiveness and official processing.

How Tax & VAT Associates helps

• A vendor screening policy and risk-tier matrix tailored to your categories
• Document checklists, declaration forms and an onboarding questionnaire
• Verification of RJSC, BIN, e-TIN and trade license details with a written report per vendor
• Ownership and conflict-of-interest mapping for medium and high-risk suppliers
• Bulk clean-up of an existing vendor master, flagging duplicates and expired documents
• Annual re-screening and expiry tracking

Frequently asked questions

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Last reviewed: 6 October 2026. Bangladesh tax and regulatory rules change with each Finance Act, SRO and authority circular. This page is general guidance; confirm current requirements for your case before filing.