National Board of Revenue has initiated a move to realise value-added tax on advertisement bills paid by local companies to the global technology giant such as Facebook, Google, Youtube and digital platforms.
VAT at the rate of 15 per cent will be applicable on payments against advertisements given by local firms on the global digital media houses and other platforms.
The revenue board on Thursday issued a letter asking its field offices for examining whether Bangladesh Bank and other commercial banks were deducting the VAT while clearing the payments.
VAT wing of the NBR also forwarded a copy of the letter to the governor of Bangladesh Bank for his appraisal.
A large number of local firms including multinational companies operating in Bangladesh are giving advertisements on Facebook and Youtube to promote their goods and services.
The share of online advertisements is rising day by day.
According to the article 3 of the Value-Added Tax Act-1991, VAT at the rate of 15 per cent would be applicable on payments for services received from abroad and service receiving local firms would pay the VAT, the letter said.
The services include, among others, advertisements on Facebook, Youtube and other media, as per the letter sent to commissioners of 12 field-level VAT commissionerates.
Bangladesh Bank and other commercial banks are supposed to deduct VAT while making payment of the bills on behalf of the local advertisers and deposit to the government exchequer.
A number of bankers on Saturday told New Age that advertisers generally made the payments using international credit cards. Banks don’t ask the purpose of the payments if the amount of the transaction remained within limit set by the central bank.
So, it is hard to detect the payment made as advertisement bills and deduct VAT, they observe.
Officials of the revenue board said that they would find out ways to realise the tax as this might be a potential area of revenue mobilisation.
NBR would take specific steps after getting reports from the field offices, they said.
‘In this context, we have asked the commissioners to examine whether the banks are deducting the VAT or not while making payment and provide information to the NBR,’ said a high official of the revenue board.
He said they took the step to ensure collection of VAT from the sector as number and frequency of advertisements on global digital platforms like Facebook, Youtbue, Google and others increased in recent years.
VAT collection from the sector did not come to the notice of the VAT officials as it was a relatively new area, he said, adding that enforcement of the provision of the law would also increase revenue collection of the NBR.
On the other, local stakeholders, particularly online media houses, were pressing for bringing advertisements on global online platforms under tax net, he said.
Newspaper Owners’ Association of Bangladesh has recently for several times requested the finance ministry and the NBR for bringing advertisement bills under the tax net claiming that half of the total advertisements on local media houses were already taken away by the global digital platforms.
Officials of the revenue board said that they could not impose tax on income of the global giants as they had no permanent establishments or offices in Bangladesh.
NBR, however, can impose VAT on advertisements bills as per the VAT law, they said.
Income tax wing of the NBR earlier in the budget for the current fiscal year 2017-2018 imposed 15 per cent advance income tax, known as AIT, on payments for digital marketing to foreign nationals.
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