From now on non-resident foreign companies, such as Google, Facebook YouTube and Netflix, will be able to obtain VAT registration, submit VAT returns and pay VAT directly.
The National Board of Revenue (NBR) has incorporated the provisions for such companies in the VAT law and put the option on the online VAT software under VAT Online Project (VOP).
These global giants had been facing problem since 2019 to obtain VAT registration and submit VAT returns, as the VAT law barred them to get direct access from their resident countries.
Due to some complex provisions in the law, the non-residents companies had to appoint VAT agents to be tax complaint.
The companies sent several letters to the NBR, requesting it to allow them obtain the services directly, as they did not have any permanent establishment in Bangladesh.
From now on, the global giants would be able to enjoy direct access to the VAT administration.
A number of consultants of the global tech giants hailed the amendments, but also pointed out some major issues that still might create problem for the companies.
As per the VAT law, the local VAT agents would be liable in case of VAT payment evasion. Also, they might have to face 'duel VAT' payment, as commercial banks deduct VAT from them too.
NBR sources said they were also working to address those barriers in the budget for upcoming fiscal year (FY), 2021-22.
The mandatory provision for appointing VAT agent may be made optional in the budget for next FY, it was learnt.
Preferring anony-mity, a representative of global consultant company said their global policy does not permit them to take the responsibility of VAT evasion by a company.
In the other countries, appointment of the VAT agents is optional, which is mandatory in Bangladesh.
On dual payment, he said the NBR will have to issue instruction to the banks to check list of the VAT-registered global companies before deducting VAT.
VAT consultants said the minister for Information and Communication Technology (ICT) is taking care of the issue to solve the problem.
A number of meetings have been held between the VAT consultants, ICT minister and NBR to settle the long-pending issue.
The US-Bangladesh Business Council is also working on this on the basis of references of other countries.
Talking to the FE, Kazi Mustafizur Rahman, Project Director of the VOP, said the process to give direct access to the non-resident foreign companies has been completed.
From now on, the companies will be able to obtain VAT registration, submit VAT returns and pay VAT from outside the country through banking channel.
The NBR has amended the VAT registration form for the foreign companies, and it has been incorporated in the automated system.
The VAT agent PricewaterhouseCoopers (PwC) is already in a process to obtain licence as VAT agent for Google, he added.
According to the law, a non-resident business, without having physical presence in the country, must appoint an agent for executing its VAT-related activities.
Earlier, VAT registration form was designed for the companies having permanent establishment in the country, and not for the non-resident entities.
On November 18, 2020, the NBR amended the form to make it suitable for the non-resident companies. But, the form was inserted into the system on April 14, 2021.
The VOP project director said the process is going on to further modify the VAT rules to facilitate the global companies to be tax complaint.
"We are trying to establish connectivity with the mobile phone numbers of the representatives of the global companies outside the country to ensure authentication," he added.
Google Asia Pacific Pte Ltd, in several letters, requested the NBR to bring the required amendments and clarifications to the law to allow the company obtain VAT registration on its own and to pay tax directly instead of appointing a local agent.
The NBR made VAT registration mandatory for such firms in the budget for FY 2019-20.
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