Bangladesh makes VAT registration mandatory for Facebook, Google


June 3, 2019


Bangladesh makes VAT registration mandatory for Facebook, Google

DHAKA: The internet giants such as Facebook, Google, Youtube and other digital platforms have to complete VAT registration to run business in Bangladesh by July 1.

The National Board of Revenue of Bangladesh (NBR) has taken the move with the aim of collecting untaxed money from the online-based advertising which is being siphoned off from the economy.

So, the companies have to either set up offices in Bangladesh or appoint agents to pay VAT for running advertisements and other businesses in Bangladesh, said officials.

The government does not get mentionable VAT from the most popular social networking site Facebook, video streaming site Youtube, search engine giant Google and other digital platforms, Syed Mushfikur Rahman, director of NBR’s VAT Online Project, told the news agency.

“Actually, these sites and platforms have no offices or agents in Bangladesh, but now they have to do business complying with the local law,” he said.

As per the section 19 of the “value added tax and supplementary duty act 2012”, companies like Facebook, Google and Youtube have to go for VAT registration and pay VAT through local offices or agents, NBR officials said.

However, the NBR has no data regarding business volume of these companies as the lion’s share of the money is being channeled through unauthorised ways.

In Bangladesh, there are over 50,000 Facebook pages which are running e-commerce business, said Muhammad Abdul Wahed Tomal, general secretary of the e-Commerce Association of Bangladesh (e-CAB).  Tomal said generally, over 25,000 to 30,000 parcels are delivered daily and the amount rises to 40,000 to 45,000 ahead of Eid or other occasions.

The turnover of the e-commerce market hit Rs 10.5 billion -12 billion annually.

Industry people said major e-commerce organisations spend $8,000- $10,000 a month for digital marketing which means it goes up to $100,000 a year.

The e-cab general secretary said e-commerce or Facebook-based e-commerce businesses spend at least $5-10 every day to give a boost to their advertisements.

Market insiders said companies like Facebook and Google and its subsidiary YouTube receive huge amounts of advertisement revenue from Bangladesh annually but the companies are not registered in the country.

As they have no VAT registration in Bangladesh, there are no estimates of how much money is being siphoned abroad for the purpose of advertisement through these sites and platforms.