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Amazon coming to Bangladesh?

  • Published at 07:37 pm May 31st, 2021
File photo: The logo of Amazon is seen at the company logistics center in Lauwin-Planque, northern France on April 22, 2020 Reuters

Following Google, Amazon has registered to do business in Bangladesh; Facebook and Netflix to register with NBR

After Google earlier this month, another tech giant Amazon has obtained a business identification number (BIN) from the National Board of Revenue (NBR).

It will pay 15% VAT on revenue derived locally.

The foreign company can now submit returns on the total turnover at the end of each year through a local consultant or online from their country.

"Copies of registration documents have been handed over to PricewaterhouseCoopers (PwC) — local consultants catering to both Amazon and Google," says Kazi Mostafizur Rahman, the Director of VAT Online Project at NBR.

Amazon has registered as Amazon Web Services Inc. using its address in Seattle, USA.

Earlier, Google had registered VAT under Asia Pacific PTE Limited using MapleTree Business City Singapore, where it has a regional office.

Also Read - Google registers to pay VAT in Bangladesh

According to Kazi Mostafizur, following the VAT registration of the foreign companies for the first time in the history of Bangladesh — a mandatory requirement for any business operating locally — Facebook and Netflix are also going to apply for VAT registration.

Although the social media giant had been paying VAT, it does not currently have a registered BIN. In 2020, Facebook Inc was pressured by the NBR to designate an agent in Bangladesh to operate locally.  

The Bangladesh government took the initiative of bringing foreign companies under the registration and VAT process in 2019, as Tech giants — Google, Amazon, and Facebook — had been making around Tk3,000 crore from Bangladesh annually.

Amazon ranks as one of the world's top companies by market value.

As of February, Amazon had a market cap of $1.7 trillion. The company posted a net income of $21.3 billion during its 2020 Fiscal Year, which ended 31 December 2020.

In contrast, the bulk of Google's $181 billion revenue in 2020 came from its proprietary advertising service, Google Ads.

All large companies, including Multi-National Companies (MNCs) — Reckitt, Marico, Foodpanda — and local companies— Pathao, Evaly, and others — use digital media for advertising products and services.

“Tech Giants are earning local revenue,” says an official of PwC.

“Nearly all large companies are now advertising on digital media. Additionally, these companies have a large business here through e-commerce, advertisements, apps, Gmail, and other services. Service users pay these tech giants via international credit cards,” he added.

Amazon, Netflix, Facebook, and other companies have been trying to register businesses locally since 2019, but the multi-faceted complexity at several stages of registration has delayed the process.

“Although tech giants have been trying to register, the NBR did not have an efficient online registration process, but with the recent changes in the online registration in the last six months, has made it easier for foreign companies to register,” says the official of the local consultant firm.

Additionally, when a user pays for services from these tech giants through credit cards, the bank deducts 15% VAT. The VAT online project director confirmed upon inquiry.

The tech giants will be paying VAT to the NBR on behalf of unregistered users who did not register with the regulatory authority. Registered users already pay VAT to the banks that do not reach them. If the tech giant pays VAT again without receiving it from the user, it simply becomes a case of double taxation, he added.

Regarding the issue, Mostafizur said the NBR had been heavily implementing and upgrading systems that will ease the process further.

"The initial online registration process we had was very different from international standards. The software only registered digits as TIN and BIN numbers, whereas globally alphabets and digits are both used," says the NBR VAT online project director.

In a surprising turn of events, local competitors have expressed excitement about the prospect of foreign companies competing for the local market, anticipating industry standardization.

Speaking to the Dhaka Tribune CMO of Evaly, Arif R Hossain, stated foreign companies like Amazon would only increase the competitiveness of services entailing the local e-commerce sector.   

"The local market is huge, and competitiveness will only enhance the consumer experience as the integration of foreign companies will induce a certain standard for the industry to operate," he added.

Shukhon, the CEO of a start-up digital logistic company, also expressed excitement in the hopes of standardization and potential merger acquisitions.

At present, Amazon has offices in 17 nations, including the most prominent office of Amazon in Hyderabad, India.