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21 March, 2019 06:07:31 PM / LAST MODIFIED: 21 March, 2019 07:03:10 PM

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Incomes from digital ads set to come under VAT net

Independent Online Desk
Incomes from digital ads set to come under VAT net
Photo: Collected

The National Board of Revenue (NBR) has formed a committee to collect year-wise data on the incomes of social media platforms and search engines from the digital advertisements of local firms to bring those under VAT net.

Besides, the NBR is collecting organisation-based monthly data on how much money was transacted abroad for the advertisement purpose and how much Value Added Tax (VAT) and income tax were collected in the last five years.

The decision was taken in a recent meeting of NBR's special committee.

The meeting decided to send a letter to the central bank to get the monthly and organisation-based data of the last five years for payment on digital advertisement and transaction of money for the purpose, and collection of VAT and income tax from this pocket.

It also decided to co-opt a representative of the Bangladesh Financial Intelligence Unit (BFIU) in the special committee.

From the meeting, the NBR decided to send letters to the Bangladesh Telecommunication Regulatory Commission (BTRC) to get data about the published digital advertisement of mobile phone operators, Google, Whatsapp, Yahoo, Amazon, Youtube, facebook and IMO and their incomes from Bangladeshi advertisements.

Meanwhile, the Bangladesh Bank recently asked all the banks to be strict on the payment procedure and deduct 15 percent VAT on overseas payments for online purchases and adverts on digital platforms as a measure to collect VAT on payments for advertisements published or services taken from digital and social media platforms.

The latest move from the Banking Regulations and Policy Department of the central bank came following a request from the NBR on deducting VAT on payments for internet services, advertisement on digital platforms and other related services received from abroad.

Most multinational companies, including mobile phone operators, fast-moving consumer goods companies, ride-sharing and e-commerce platforms and other digital service companies spend hugely on advertisements.

The spending is increasing rapidly and some digital agencies have already sprung up to take care of this business segment.

On April 12, 2018, the High Court ordered the government to realise appropriate tax, VAT and other charges from the revenues earned by different digital platforms like Google, Facebook, Amazon, Yahoo and YouTube.

In response to a writ petition, the court also asked the government to form a special committee to assess the amount of their financial transactions in recent years and submit an assessment report by June 25.

The European Union also plans to slap a new tax on digital firms. The European commission placed a proposal on March 21 last year to collect 3 percent tax from large tech companies if they make money from user data or digital advertising in a country, regardless of their brick-and-mortar presence.

In November 2017, the Newspaper Owners' Association of Bangladesh (NOAB) sent a letter to the finance ministry, the central bank and the NBR voicing its grievance over the rise in digital advertisements.

Facebook and Google are earning a huge amount of money from digital advertisements but they are not paying any tax, the association said.

The two tech giants have no office in Bangladesh, which allows them to remain out of the purview of Bangladesh's laws.

But it is a requirement that every company that wants to do business in any country complies with the local laws.

To bring the incomes of the tech companies under the tax net, the NBR slapped a 15 percent withholding tax this fiscal year on 'advertisement income or digital marketing'. In addition, a 15 percent VAT is to be paid by the advertisers on the bills served by digital companies.UNB.

HM

 

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Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
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Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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