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Closing Business with Sav.com due to there wrong MCC
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Closing Business with Sav.com due to there wrong MCC

I have a small it company in Bangladesh. So i have to purchase domains frequently. So i use multiple provider. One of them is sav. I am very pleased with them for domain service. About 8days ago, i purchsed a domain from them via my credit card. I have been charged 15% vat from my card issuer bank for purchasing from sav which never happened before. So i contacted the bank and they said due to instructions from central bank of bangladesh they need to charge vat for advertising service. So i replied them that sav is a domain provider and i purchased domain which is vat exempted goods according to law. They talk to there higher authorities and confirmed that it’s charged becaused sav using MCC 7311 which means they are providing advertising service. So i open a ticket on sav and they also talked to there finance department and higher authorities confirmed that MCC is determined by card issuer bank. So i replyed to bank with this info and they again talked to there higher authorities and confirmed that it’s not determined by bank. So both of them are strict to there word. I searched google and asked chatgpt and read blogs and figured out that it’s not determined by card issuer bank. It's set by sav who is merchant or the bank who provide payment gateway to sav.
So in this situation, it’s sav who need to correct there merchant category code (mcc) to proper one.
15% vat is charged each time for purchasing from such merchant with 7311 code in my country. So i can't afford this extra vat for such vat exempted goods when its come to bulk amount. So we (me and my team) decided to closing further business with sav.
I am a happy and pleased customer of sav for several years except this situation raised.
I am writing this here just because i never knew that mcc really matter. So it will help provider to know such small thing really matter.

Comments

  • jahrincjahrinc Member

    Where are you moving to now?

  • bdspicebdspice Member

    @jahrinc said:
    Where are you moving to now?

    i already use more then 1.

    @bdspice said: So i use multiple provider.

  • Dont you "recover" VAT when selling services?
    Don't know anything about business in Blangladesh.. but in Europe you pay VAT to the goverment in this fashion:
    VAT Collected (sales) - VAT Paid (sourcing) = VAT to deliver montly to the tax boys.
    So TAX in essence, are paid by the consumer, not businesses.

  • jarjar Member, Patron Provider
    edited March 26

    Who does sav user for their merchant account? It could be that they don’t think it’s their problem because they’ve never had to deal with it, and could be at least a little right that it may not be something they themselves did. This is quite often a point of confusion, no matter the size of the company.

    Of course, getting through to them on the issue could very well be impossible. The bigger the company, the less willing people above support are to talk with customers. This is why I really enjoyed a thing we did at a big company I worked for: We had one person from support insert themselves into each major team at the company to act as the bridge to that team.

  • emghemgh Member

    @bdspice said: I searched google and asked chatgpt and read blogs and figured out

    xD

    Thanked by 1BingoBongo
  • davidedavide Member
    edited March 26

    Wikipedia on Merchant category code, reference #2:

    The MCC is assigned by the Acquiring financial institution when a supplier first begins accepting Visa payment cards. The MCC is assigned based on the supplier’s primary line of business. For example, if a supplier primarily sells computers, it may be assigned MCC 5732 “Computer Hardware”. If a supplier primarily repairs computers, it may be assigned MCC 7379 “Computer Maintenance, Repair, and Services”.

    Wikipedia on Acquiring bank:

    An acquiring bank (also known simply as an acquirer) is a bank or financial institution that processes credit or debit card payments on behalf of a merchant. [1] The acquirer allows merchants to accept credit card payments from the card-issuing banks within a card association, such as Visa, MasterCard, Discover, China UnionPay, American Express.

    So neither Sav or your bank are at fault, but I guess it's Sav that should reach out to your "acquiring bank" to correct their MCC. Not going to happen imho. You might try with a different card.

  • Don_KeedicDon_Keedic Member
    edited March 27

    I've never heard of the company before but it's highly unlikely anyone is going to change anything at that level for a single client (unless you're a whale.)

    You did the right thing by just moving on.

    Just remember in the future that just because you feel something is incorrect doesn't mean the company that you're willingly contracting with shares the same view. They have their system set up the way they need it and if that's working for them, they'll likely continue to do that.

    Best thing you can do outside of moving on is just sending an email over to their customer service team letting them know the issue you had with your transaction. If enough people bring up the issue, they'll likely change whatever they need to in order to make that sweet, sweet money. If there isn't enough demand, why bother? Wouldn't make any sense but if no one brings it to their attention, likely nothing is going to change on its own.

    Asking for a quote and verifying there aren't going to be any issues that may arise is something you and only you can do. Every registrar company has a sales team. Send a quick email for a quote+any possible charges/fees and then go from there. If you would have done that, you'd have nothing to complain about because the only issue is you not doing your own due dilligence before finalizing your order.

    Lesson learned, c'est la vie.

    Thanked by 1bdspice
  • bdspicebdspice Member

    @404error said:
    Dont you "recover" VAT when selling services?
    Don't know anything about business in Blangladesh.. but in Europe you pay VAT to the goverment in this fashion:
    VAT Collected (sales) - VAT Paid (sourcing) = VAT to deliver montly to the tax boys.
    So TAX in essence, are paid by the consumer, not businesses.

    Domain and hosting service is vat exempted goods in Bangladesh. We can't collect vat from sales for this.

  • bdspicebdspice Member

    @jar said:
    Who does sav user for their merchant account? It could be that they don’t think it’s their problem because they’ve never had to deal with it, and could be at least a little right that it may not be something they themselves did. This is quite often a point of confusion, no matter the size of the company.

    Of course, getting through to them on the issue could very well be impossible. The bigger the company, the less willing people above support are to talk with customers. This is why I really enjoyed a thing we did at a big company I worked for: We had one person from support insert themselves into each major team at the company to act as the bridge to that team.

    They talked well, but they don't want to set correct mcc or even they don't care to investigate it. They already denied that determining mcc is at there end.

  • bdspicebdspice Member

    @davide said:
    Wikipedia on Merchant category code, reference #2:

    The MCC is assigned by the Acquiring financial institution when a supplier first begins accepting Visa payment cards. The MCC is assigned based on the supplier’s primary line of business. For example, if a supplier primarily sells computers, it may be assigned MCC 5732 “Computer Hardware”. If a supplier primarily repairs computers, it may be assigned MCC 7379 “Computer Maintenance, Repair, and Services”.

    Wikipedia on Acquiring bank:

    An acquiring bank (also known simply as an acquirer) is a bank or financial institution that processes credit or debit card payments on behalf of a merchant. [1] The acquirer allows merchants to accept credit card payments from the card-issuing banks within a card association, such as Visa, MasterCard, Discover, China UnionPay, American Express.

    So neither Sav or your bank are at fault, but I guess it's Sav that should reach out to your "acquiring bank" to correct their MCC. Not going to happen imho. You might try with a different card.

    I also read those. It’s sav who can change there mcc code by contacting acquirer. You can check strip documentation for setting mcc. If strip allow merchant to set mcc, then its mean merchants can set desired mcc by themself or contacting acquirer.

  • timelapsetimelapse Member
    edited March 27

    Also used sav before but my cards dont like it. Sav always gets declined. They also dont send out alerts for expiring domains. My backorder list got wiped out without explanation. After years of being a customer they suddenly asked me for a selfie with my id and card...

    Their panel is very buggy and their dns crap.

    Thanked by 1bdspice
  • RazzaRazza Member
    edited March 27

    Never heard of vat/tax being collected by card issuer before, I've only seen tax been added and billed by the seller.

  • varwwwvarwww Member

    Hmmm, this is interesting. Seems like this is similar to the recently announced 20% TCS in India https://lowendtalk.com/discussion/184510/india-foreign-vps-domains-cloud-etc-to-become-more-expensive-20-tcs-starting-july-1st-2023/p1

    Bangladesh Bank on Sunday asked country’s all scheduled banks to deduct 15 per cent value-added tax on overseas payments made by their clients using any method, including credit card, against services like online purchase and advertisement on digital platforms.

    Thanked by 2angstrom bdspice
  • Mahfuz_SS_EHLMahfuz_SS_EHL Member, Host Rep

    @bdspice said:

    @404error said:
    Dont you "recover" VAT when selling services?
    Don't know anything about business in Blangladesh.. but in Europe you pay VAT to the goverment in this fashion:
    VAT Collected (sales) - VAT Paid (sourcing) = VAT to deliver montly to the tax boys.
    So TAX in essence, are paid by the consumer, not businesses.

    Domain and hosting service is vat exempted goods in Bangladesh. We can't collect vat from sales for this.

    Your information is not true. If you don't know recent VAT Policy from NBR, let me tell you, Domain & Hosting sales will incur 5% VAT.

    Thanked by 1nezam05
  • ExonHostExonHost Member, Host Rep

    @bdspice said:

    @404error said:
    Dont you "recover" VAT when selling services?
    Don't know anything about business in Blangladesh.. but in Europe you pay VAT to the goverment in this fashion:
    VAT Collected (sales) - VAT Paid (sourcing) = VAT to deliver montly to the tax boys.
    So TAX in essence, are paid by the consumer, not businesses.

    Domain and hosting service is vat exempted goods in Bangladesh. We can't collect vat from sales for this.

    Only income tax is exempted not VAT.

    Thanked by 1nezam05
  • bdspicebdspice Member

    @Razza said:
    Never heard of vat/tax being collected by card issuer before, I've only seen tax been added and billed by the seller.

    In our country, revenue board send notice to giant companies like fb, google,netflix to have a office in our country and pay tax. But they are not responding accordingly so national revenue board and central bank of Bangladesh started charging 15% vat for international transactions under advertising service and streaming service category.

  • bdspicebdspice Member

    @Mahfuz_SS_EHL said:

    @bdspice said:

    @404error said:
    Dont you "recover" VAT when selling services?
    Don't know anything about business in Blangladesh.. but in Europe you pay VAT to the goverment in this fashion:
    VAT Collected (sales) - VAT Paid (sourcing) = VAT to deliver montly to the tax boys.
    So TAX in essence, are paid by the consumer, not businesses.

    Domain and hosting service is vat exempted goods in Bangladesh. We can't collect vat from sales for this.

    Your information is not true. If you don't know recent VAT Policy from NBR, let me tell you, Domain & Hosting sales will incur 5% VAT.

    As much as i know 5% vat for it enabled service. So 15% is only for advertising service and streaming service all i know

  • Mahfuz_SS_EHLMahfuz_SS_EHL Member, Host Rep

    @bdspice said:

    @Mahfuz_SS_EHL said:

    @bdspice said:

    @404error said:
    Dont you "recover" VAT when selling services?
    Don't know anything about business in Blangladesh.. but in Europe you pay VAT to the goverment in this fashion:
    VAT Collected (sales) - VAT Paid (sourcing) = VAT to deliver montly to the tax boys.
    So TAX in essence, are paid by the consumer, not businesses.

    Domain and hosting service is vat exempted goods in Bangladesh. We can't collect vat from sales for this.

    Your information is not true. If you don't know recent VAT Policy from NBR, let me tell you, Domain & Hosting sales will incur 5% VAT.

    As much as i know 5% vat for it enabled service. So 15% is only for advertising service and streaming service all i know

    No, specifically mentioned about Domain-Hosting for taking 5% VAT on service provided.

  • angstromangstrom Moderator
    edited March 27

    @bdspice said: As much as i know 5% vat for it enabled service. So 15% is only for advertising service and streaming service all i know

    Well, whether 15% or 5% (and the two links that @varwww provided above mention 15% and not 5%), this seems to be a decision made by the National Board of Revenue and Bangladesh Bank, in which case there's nothing special about Sav.com here: presumably, you would see the same result (+ 15%) from any domain registrar (moving forward)

    Or have I missed something?

  • @bdspice said:

    @404error said:
    Dont you "recover" VAT when selling services?
    Don't know anything about business in Blangladesh.. but in Europe you pay VAT to the goverment in this fashion:
    VAT Collected (sales) - VAT Paid (sourcing) = VAT to deliver montly to the tax boys.
    So TAX in essence, are paid by the consumer, not businesses.

    Domain and hosting service is vat exempted goods in Bangladesh. We can't collect vat from sales for this.

    If the accounting is done in the same way as in the EU, then it doesn't matter.
    As long as you sell other services with VAT, you'll be able to recover that VAT as well.

    Other are saying that you need to check on new regulations. So my advice would be to rech out to your accounting and ask them to look into this.

    I'd be interested know what they say. (simply out of curiosity)

  • JasonMJasonM Member

    there are many domain providers who do not charge VAT in bangladesh.
    try them. why are your using sav.com if you are not willing to pay extra 15%

  • inlandinland Member

    Sav customers can purchase domains with any major credit or debit card or PayPal.

    What's wrong with paying with PayPal? It doesn't pass the MCC code.

    BTW. You learn so much about developing world on LowEndTalk. 20% tax just to send your already taxed money abroad sounds so absurd.

  • bdspicebdspice Member

    @JasonM said:
    there are many domain providers who do not charge VAT in bangladesh.
    try them. why are your using sav.com if you are not willing to pay extra 15%

    Sav dont charge vat. Sav using mcc as a advertising service provider which make me to pay 15% vat to my country.

  • bdspicebdspice Member

    @inland said:

    Sav customers can purchase domains with any major credit or debit card or PayPal.

    What's wrong with paying with PayPal? It doesn't pass the MCC code.

    BTW. You learn so much about developing world on LowEndTalk. 20% tax just to send your already taxed money abroad sounds so absurd.

    Paypal is not available in Bangladesh.

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