Global technology giants like Google and Facebook operating in Bangladesh have to register for payment of value-added tax through agents enlisted with the National Board of Revenue as the law does not allow businesses operating from outside the country to take VAT registration on their own, said NBR officials.
Officials said that the revenue board had recently come to this conclusion following a request from Google to allow it to obtain VAT registration on its own and to pay the indirect tax directly instead of appointing a local agent.
The NBR has also requested the information ministry and the Bangladesh Telecommunications Regulatory Commission to ask the global digital platforms to appoint VAT agents and comply with the VAT law as none of these companies are yet to comply with the VAT law in five months, said a high official.
The revenue board has completed all related preparations at its end, including issuance of the Gazette notification on enlisting VAT agents and framing VAT registration forms, to bring the companies under the VAT law, he added.
The tax authorities in the budget for the current fiscal year 2019-2020 brought the global social media giants and technology companies operating in Bangladesh without their own offices, known as non-resident businesses in the VAT and Supplementary Duty Act-2012, under the VAT net and imposed 15 per cent VAT on their digital services, including advertisement, from July 1.
VAT will also be applicable on advertisements broadcast in the territory of the country for foreign products.
Since then, the VAT wing of the NBR on several occasions had requested the Bangladesh Telecommunication and Regulatory Commission and information ministry to ask companies like Google, Facebook, Youtube, WhatsApp and foreign satellite television channels, to appoint VAT agents and pay VAT.
So far, none of the companies had complied with the law nor filed their VAT returns.
There is also a provision in the law that subjects these entities to fines worth Tk 10,000 per month for not filing the VAT returns.
Google Asia Pacific Pte Ltd, in a letter on October 22, requested the revenue board to bring the required amendments and clarifications in the law to allow the company to obtain VAT registration on its own and to pay the indirect tax directly instead of appointing a local agent.
The company also sought time to comply with the provisions of the law and requested the NBR to defer the imposition of the relevant provisions till it had registered under the VAT system.
According to the law, a non-resident business must have to appoint a VAT agent for executing its VAT related activities if it carried out economic activities without being physically present in the country, officials said.
The appointed VAT agent would take all responsibilities related to VAT payments of the non-resident business and there was no provision to provide a business identification number (BIN), commonly known as VAT registration number, to a non-resident entity, they said.
A company must have a physical address in Bangladesh and provide bank accounts details to obtain the BIN from the VAT online system, they added.
The companies were also not responding to the government’s request for setting up their offices in the country saying that it would not be sustainable for the companies financially.
Facebook in September, however, assured the government that it would soon appoint a local representative to ensure payment of VAT from their advertisements earnings from Bangladesh.
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