Bangladesh is going to impose 10 percent Advance Tax (AT) on digital advertisements, including those put on social networking sites like Facebook and Youtube and search engine google, from the next fiscal year.
The national budget for the 2020-21 fiscal year to be placed in the House on Thursday includes the new VAT law.
The government earning from the digital ads published in cyberspace was zero until it levied 15 percent VAT(Value Added Tax) on such digital advertisements in the 2018-19 fiscal year.
The upcoming budget is likely to propose the AT on digital ads to be paid by the advertisers. The National Board of Revenue (NBR) will collect it from transactions through banking channels.
The High Court in 2019 ordered the government to collect VAT on payments for advertisements published or services taken from digital and social media platforms.
Followed by the order, the revenue board asked the Bangladesh Bank seeking necessary measures. The central bank then instructed the commercial banks to collect VAT on digital ads and deposit the money in the state coffer.
Now, the NBR says it could not get any notable amount from the tech giants owing to business identification number or BIN complications.
NBR officials said numerous issues over VAT collection surfaced since the social media platforms do not have any BIN or Bangladesh offices. However, the revenue board has taken some steps to resolve the issues including appointing VAT agents.
"But advance tax collection will not face such issues over physical existence or BIN as the advertisers will be charged on bankpayments," said the officials.
The HC asked the central bank, NBR and Telecommunication Regulatory Commission about the amount social media platforms and other websites earned from Bangladesh in the last five years.
In reply to that, the telecom regulator said five mobile network operators alone gave advertisements to foreign websites worth Tk825 crore since 2015.