Online sellers point finger at excessive taxation
The measures e-CAB sought include withdrawing VAT on office rent by online firms and continuing tax holiday for info tech and services until 2034
Entrepreneurs said too much taxation compared to neighbouring countries is a major barrier to the country's thriving e-commerce sector, and urged the revenue authorities to reduce the online-offline taxation gap.
Referring to the price of a shirt, they said the cloth costs Tk1,000 offline while the price goes to Tk1,100 if it is bought from e-shopping sites thanks to Tk100 tax and VAT in different layers.
"On a Tk1,000 purchase, a buyer has to pay Tk50 VAT [value-added tax] on shopping, Tk15 VAT on delivery charge and another Tk30-40 tax deduction at source [TDS]. But the rates in our neighbouring countries are Tk20-30," AKM Fahim Mashroor, chief executive officer of online shopping site AjkerDeal, told the national revenue board in a pre-budget parley Wednesday.
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Attributing the staggering taxes to only 3%-4% online shoppers in Bangladesh, Fahim Mashroor said up to 30% consumers do their shopping online in the neighbouring nations.
With revenue board chairman Abu Hena Md Rahmatul Muneem presiding over the meeting, online entrepreneurs' platform e-Commerc Association of Bangladesh (e-CAB) President Shomi Kaiser sought policy support to help flourish the sector.
The measures e-CAB sought include withdrawing VAT on office rent by online firms and continuing tax holiday for info tech and services until 2034.
Shomi Kaiser noted the pandemic-led shutdown and economic fallout led to at least 1 lakh new entrepreneurs joining the online market, and 98% of all the e-commerce sellers have been playing by the book.
In a separate session on Wednesday, the Anti-Tobacco Media Alliance (Atma) urged the revenue authorities to hike tobacco product prices further. The anti-tobacco campaigners proposed setting the price of 10 sticks of low-tier cigarettes at Tk50 and to raise prices of all tobacco products by imposing specific taxes.
Atma delegates claimed their proposal would help save more than 445,000 adults and nearly 448,000 youth from premature deaths. Besides, it would fetch the revenue authorities Tk9,200 crore extra.
But the revenue board chairman opined hiking tobacco prices seem not yielding the desired impact on public health.
Nadia Binte Amin, president at the Women Entrepreneurship Network for Development Association (WEND), proposed the revenue board raising the tax-free income limit for women from the existing Tk3 lakh to Tk5 lakh.
Highlighting VAT-related issues, she said though Tk50 lakh annual turnover is supposed to qualify for VAT exemption, revenue collectors show up as soon the shops are open. Similarly, although there are talks over turnover tax on sales of Tk50 lakh to Tk3 crore, there is a difference in enforcement.
The association president said VAT registered companies are fined Tk10,000 for non-submission of monthly returns, while some businesses do not make a profit of Tk10,000 per month.
Noting harassment to get access in Covid stimulus, she also talked about whether possessing a business identification number is logical for facebook-based market boosting.
Naaz Farhana Ahmed, director of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), highlighted the harassment of women entrepreneurs in paying VAT and taxes.
She proposed to formulate policy guidelines for women entrepreneurs.
Ziauddin Chowdhury, country manager of Xiaomi Bangladesh, wanted a ten-year tax exemption to mobile phone manufacturers saying that would encourage foreign direct investments in the sector.
Akij Motors proposed the revenue board to reduce import tariffs on electric motorcycles.
Shahid Alam, vice president of the Bangladesh China Chamber of Commerce & Industry, proposed to reduce the existing surcharge on assets above Tk3 crore from 35% to 5% to curb the money flow abroad and encourage local investment.
The India-Bangladesh Chamber of Commerce and Industry highlighted the issues in importing food items through Benapole port and proposed a number of measures.
The Bangladesh Publishers and Book Sellers' Association proposed source tax exemption on book purchases.
"We have now Digital commerce SOP which clarifies Retail and online Marketplace as separate business model and we recommend the existing VAT law to include online Marketplace along with Retail based business under the definition Online Good Sales. We have also asked amendment to minimum turnover tax to zero since this industry is still at infant stage and significant investment requires to develop the infrastructure for steady growth of this industry," said Hasinul Quddus, chief corporate affairs Officer of Daraz Bangladesh.
