The Large Taxpayers Unit (value-added tax) of the National Board of Revenue has asked 17 commercial banks to submit reports on whether they deducted VAT on advertisement bills paid by local companies to global digital platforms.
The banks have been asked to submit in seven working days the details of VAT collection from advertisement bills paid to international companies like Facebook, Youtube, Google and other digital platforms, LTU officials said.
They said that the move was taken to determine the actual tax liability of the relevant companies through scrutinising the VAT collection status of banks.
In separate letters issued on May 9 to managing directors of the banks, the LTU said that the banks were liable to deduct VAT at the rate of 15 per cent while local advertisers making payment of advertisement bills to the global technology giants using the banking facility.
The 17 banks which are under LTU’s jurisdiction include Agrani Bank, BRAC Bank, Islami Bank, AB Bank, Dhaka Bank, Dutch Bangla Bank, Janata Bank, Uttara Bank, Prime Bank, Pubali Bank, Sonali Bank, Standard Chartered Bank, National Bank, Premiere Bank, Bank Asia, HSBC and South East Bank.
As per VAT Act 1991, banks and other financial institutions will deduct VAT from service receivers during payment for receiving services from beyond the geographical boundary of the country.
In the letter, the LTU said that service receivers or local companies clear the payment of advertisement bills through Bangladesh Bank and other commercial banks.
VAT officials said that the NBR in April asked its field offices to examine whether the central bank and other commercial banks were deducting VAT while clearing the payments.
They said that the quantity of advertisements on global social media sites and other digital platforms by local manufacturers and service providers, including multinational companies and mobile operators, had been rising over the years following expansion of social media across the country.
The LTU had initially given the banks seven working days for furnishing their respective reports, which ended on Sunday, said a senior NBR official.
Some banks responded to the call, he said, adding that the time limit might be extended if sought.
He said that the next steps would depend on compliance of the banks on deducting applicable VAT.
A number of bankers have recently told New Age that advertisers generally made the payments using international credit cards and the banks did not ask the purpose of the payments if the amount of the transaction remained within the limit set by the central bank.
So, it is hard to detect the payments made as advertisement bills and deduct VAT, they said.
The banks were also not aware of the applicability of VAT in the sector, they said.
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