The Financial Express

Global accountants to be VAT representatives of tech giants

| Updated: June 13, 2021 10:18:00

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Globally reputed accounting firms will be able to work as VAT representatives of non-resident technology giants from the fiscal year 2021-22 in Bangladesh.

The proposed change of a provision in the VAT law through the national budget will pave the way for them.

If passed in parliament, the firms need not take liability of VAT evasion if they work as local agents of companies like Google, Facebook, Amazon and Netflix.

There was a provision in the VAT and Supplementary Duty Act-2012 that would hold VAT agents responsible if VAT officials detected any evasion by global tech giants.

According to officials, said the provision was a major roadblock against obtaining VAT registration and submission of VAT returns by non-resident companies.

The National Board of Revenue (NBR) made VAT registration and returns mandatory in July 2019 for the global technology giants to operate in Bangladesh.

The companies with no permanent establishments in Bangladesh were having trouble complying with the law.

Not a single global firm agreed to take the onus of VAT payment on behalf of the tech goliaths.

The VAT registration form for non-resident companies was also faulty due to mandatory data requirement of local banks.

The NBR in different phases made the system easy for global companies through amending the law.

Google and Amazon have recently obtained registration and they will file VAT returns in the next fiscal.

According to accounting firm sources, other non-resident companies like Facebook and Netflix are also in the process of obtaining VAT registration.

They hope to start correspondence with the tech biggies apprising them of a proposed change in the Finance Bill.

Mamun Rashid, managing partner of PricewaterhouseCoopers (PwC) Bangladesh, welcomed the proposed amendments to the law to help Vat agents work for global companies.

"The NBR through the Finance Bill has proposed to remove the joint and several liabilities on VAT agents for dues payable by non-resident entities," he said.

This would encourage reputed accounting firms to act as VAT agents of these entities which, in turn, would help more non-resident entities to get registered, he cited.

As proposed, non-resident companies will be responsible for paying applicable taxes, penalty and interest, and VAT agents will not take the sole responsibility.

However, VAT agents will have to take other types of responsibilities and act as representatives to do other work of the companies.

Vat officials said the appointment of a local agent has been made mandatory for non-resident companies for corresponding on different VAT-related issues.

Earlier, Google and Netflix made several requests to the revenue board to amend the law for simplifying the VAT payment process for them.

On their requests, the NBR allowed them to obtain VAT registration, submit returns and pay VAT directly from their parent companies.

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