Two of the world's largest tech giants Google and Amazon have obtained their Business Identification Number (BIN) from the National Board of Revenue (NBR) – a mandatory requirement for any business operating in Bangladesh.
For the first time ever, two non-residential companies have registered for BINs in the country, and they will now pay a 15% VAT on revenue derived from Bangladesh, and submit returns on the total turnover at the end of each year.
This move will speed up the process of such companies opening their offices in Bangladesh, and clear the way for corporations like Facebook to register here as well, NBR officials told The Business Standard.
Providing more details, NBR's VAT Online project director Kazi Mostafizur Rahman said, "We issued a BIN to Google on Monday and Amazon on Thursday. They registered under the names The Google Asia-Pacific Pte Ltd and Amazon web services Inc respectively.
"We already handed over the copies of registration documents to PricewaterhouseCoopers (PwC) – which serves as consultants for both companies in Bangladesh.
Last year, Facebook Inc appointed an agent to do business in Bangladesh after facing pressure from the NBR. The company's agent Httpool has been paying VAT to the board, but Facebook still does not have a BIN in Bangladesh.
At present, Google operates in 40 countries around the world, having set up 70 offices, while Amazon has offices in 17 nations. Both the companies have local offices and entities in India, including the biggest office of Amazon in Hyderabad.
Google is well known for its popular search engine, email service, web browser, and various online tools used by billions daily at work, at home, and on the go. The bulk of Google's 181-billion-dollar revenue in 2020 came from its proprietary advertising service, Google Ads.
Included in the list of "other revenues" is income from related online, media, and cloud computing businesses such as the Play Store, Chromecast, Chromebooks, Android, Google Apps, and the Google Cloud Platform.
Amazon ranks as one of the world's top companies by market value. As of February 5, 2021, Amazon had a market cap of $1.7 trillion. The company posted net income of $21.3 billion during its 2020 Fiscal Year, which ended 31 December, 2020.
Due to the booming e-commerce sector and the fact that nearly all of the large companies are now advertising on digital media, tech giants such as Google, Amazon and Facebook are making around Tk3,000 crore from Bangladesh annually, industry insiders have said.
Advertisers are paying the tech giants with international credit cards. But there are allegations that many are using illegal channels to transfer payments, which is not compliant with the NBR regulations.
Asked how Google and Amazon will do business and pay VAT in Bangladesh after obtaining their BINs, the VAT Online project director said, "These companies already have a large business here through e-commerce, advertisements, apps, gmail and other services.
"They will continue in the same way as before, but the process will now be compliant with the regulations."
Kazi Mostafizur Rahman added, "Such companies have two options to pay their VAT. They can appoint an agent in Bangladesh to pay VAT, or they can use a Bangladesh Bank branch in another country for this process.
"A company can also make online payments to any bank in Bangladesh, and then send us the invoice, or pay us through foreign banks that have branches here."
Adding that Google and Amazon will have to submit returns on their annual turnover from now on, the NBR official said, "They can submit returns through a local consultant or online from their country.
"However, we prefer that the companies open offices here to be fully compliant with the digital platform."
The Bangladesh government in 2019 took the initiative to bring foreign companies under the registration and VAT process.
The country also made multiple failed attempts to establish an admin panel in Facebook, as the company added their terms and conditions to Bangladesh Telecommunication Regulatory Commission's (BTRC) proposals.
After much effort from Bangladesh, Facebook appointed an agent in the country in 2020.
On the other hand, Google, Amazon, Netflix and a number of other organisations have been trying to register their business in Bangladesh since 2019. Google and Amazon had contacted a Bangladeshi firm for getting their registration, but later faced complexities in the VAT law.
Eventually they backed off due to double taxation, the NBR having no process for registering non-residential companies, and having no facility for online payments.
An official of the consultation firm, on condition of anonymity, said though Google and Amazon navigated through the complexities and received their BIN, they will still have problems setting up officers in Bangladesh.
The official added, "Under the existing VAT laws, it is mandatory for any established company with a turnover of more than Tk5 crore to utilise Sales Data Controller and maintain a purchase account for submitting returns.
"But such organisations use their own global platforms and have no purchase in Bangladesh. These issues could complicate matters for them."