The Silicon Valley-based company was also told to follow local laws for publishing contents on its platform
Social media giant Facebook will have to set up a local office and employ local agents to operate its business in Bangladesh.
It will not be allowed to employ foreign agents here.
The National Board of Revenue (NBR) strongly presented this opinion to the Facebook authorities following an allegation of noncompliance with the value-added tax (VAT) law by Httpool Bangladesh Ltd, an agent that collects VAT on advertisements on the social media platform from local companies.
The Silicon Valley-based company was also told to follow local laws for publishing contents on its platform.
These were discussed on Monday at a meeting attended by officials of the posts and telecommunications ministry, the NBR, the Bangladesh Telecommunication Regulatory Commission (BTRC), and Facebook.
Mustafa Jabbar, minister of posts and telecommunications, told The Business Standard revenue and security were the meeting's main agenda.
"The Facebook authorities assured us that they would take the issues seriously, and would comply with the Digital Security Act 2018, and tax and VAT acts," he said.
"As a development of the previous meeting, Facebook has already appointed a Bangladeshi-origin representative who will look after the issues concerning Bangladesh on the social media platform," the minister added.
After long efforts made by the NBR and the telecommunication ministry, Httpool announced its appointment as Facebook's local sales partner in June this year, making it easy for local companies and self-employed people to advertise their products and services on the vastly popular social media platform.
However, the VAT Audit, Intelligence & Investigation Directorate under the NBR found that the digital ad agency was not operating from the address it had used while obtaining VAT registration.
The company got its VAT registration using an address at Karwan Bazar in the capital in May this year. But the VAT directorate did not find the "existence" or "activities" of the firm during investigation.
Therefore, on August 13, the NBR filed a case against the company.
Meanwhile, the NBR came to know that Httpool had received 198 advertisements and invoices worth Tk6.22 crore from 31 companies but had not paid any VAT since its appointment in June.
The online advertising market in Bangladesh is worth around Tk2,000 crore, and half of that is held by Facebook. There are currently 3.5 crore Facebook users in Bangladesh, which is expected to rise to 10 crore in 2021.
Apart from Facebook, a total of 41 companies have been hired as agents to collect VAT from other foreign online platforms, including Google, YouTube, Twitter, and WhatsApp.
Facebook content censoring
The telecommunication ministry and the BTRC emphasised content censorship at the meeting.
BTRC officials told The Business Standard Facebook hardly responds to reports of the commission and law enforcing agencies when they ask the social media giant to delete contents posted from Bangladesh.
At the meeting, BTRC officials told the Facebook representative that if the company ignores the report of the government agencies, it has to explain the reason.
The telecommunication minister said in this regard, "We told Facebook that their European and American standards would not work for us. The company needs to follow the Bangladesh standards if it wants to operate here."
"We will not allow any social media platform to put our country at risk. Our government is seriously concerned about the issue. We can make any decision for the safety of our country," he said.
Among others, Brigadier General Mustafa Kamal, director general (system and services) of the BTRC, Alamgir Hossain, member (tax policy) of the NBR, and other senior officials were present at the meeting.