The Financial Express

Social media giants to be allowed to register with Bangladesh's revenue board

| Updated: November 24, 2020 13:54:51

Evaly and Fianancial Express Evaly and Fianancial Express
Social media giants to be allowed to register with Bangladesh's revenue board

The National Board of Revenue (NBR) is set to allow social media giants to register with the VAT department, though the foreign companies have no local bank accounts.

The requirement for having a local bank account will be relaxed to facilitate the companies to obtain VAT registration without having permanent establishments in the country.

The board has prepared a new VAT registration form, effective from November 15, for the foreign companies to apply for VAT registration or Business Identification Number (BIN).

In the form, the NBR made the accounts in a local bank optional along with relaxing some other provisions for such companies, which mostly operate remotely.

"We have amended the VAT law incorporating necessary provisions for the foreign companies such as Netflix, Google, Facebook and YouTube to register with the VAT department in Bangladesh," said a senior tax official.

He said the companies will be able to pay VAT directly from their bank accounts outside Bangladesh.

However, the companies will have to appoint a VAT agent in Bangladesh, who will represent the company and bear the responsibilities if there is VAT evasion.

Earlier, streaming and search engine giants, including Netflix and Google, had requested the NBR to allow them to directly get registered with the VAT wing without appointing VAT agents.

The NBR official said it is not possible for the sake of revenue protection as the companies do not have local operations.

The companies can open local office in Bangladesh if they want to avoid submission of returns via VAT agents, the official said.

The VAT wing will issue a gazette this week with the new 2.2 VAT registration form for foreign companies and amending some of the provisions in the VAT and Supplementary Duty Act-2012.

There was a common VAT registration form for both local and foreign companies. The NBR will now issue a separate one only for foreign firms.

The NBR has wound down the number of required information, including registration with the Registrar of Joint Stock Companies and Firms, address in Bangladesh and the requirement for import and export registration certificates.

The officials said VAT agents are registered persons and companies who have obtained licences like Clearing and Forwarding Agents (C&F) do for customs.

To secure the VAT collection, the NBR needs to have access to a local entity or person who would be liable for VAT evasion, he said.

Talking to the FE, some VAT agents said they are not willing to take such responsibilities.

The tax official said the NBR is now receiving VAT from the global corporations as banks deduct it at source while making payments or remitting service charges to the companies.

However, it cannot scrutinise the collected VAT with the actual volume of subscribers or services obtained due to the absence of VAT returns.

In the VAT returns, a company will have to submit details of its financial transaction, sales and other particulars every month.

Officials said in case of payment in hundi or through third country, the NBR will not be able to trace the transactions.

Earlier, both Google Asia Pacific headquarters and the US-based Netflix requested the NBR to amend the VAT law, paving the way for direct registration.

VAT registration was made mandatory for foreign companies in the budget for fiscal year 2019-20.

The companies will have to pay monthly fines of Tk 10,000 if VAT return is not filed.

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