Finance minister Abul Maal Abdul Muhith has asked the National Board of Revenue to make suggestions about measures the government can undertake to boost e-commerce in the country.
In a recent note to the NBR, the finance minister also instructed the tax authority to prepare a complete report on the sector.
Muhith issued the instructions following a demand of Chaldal Limited, a Dhaka-based online retailer which sells goods through chaldal.com web site, for tax benefit for the sector.
Chaldal sought a reduction in the minimum tax on gross receipts and exemption from value-added tax on office rent of e-commerce companies.
In the note, the finance minister said that the government wanted to expand the online businesses in the country.
Warehouse is the fixed asset of e-commerce businesses on which 15 per cent VAT is applicable, Muhith said, adding that the companies were also paying minimum tax on their gross receipts.
They have sought the government’s support to grow further as they are incurring losses, he said.
‘In this context, I want a complete report [on the sector] and suggestions about measures we can undertake to help the sector grow,’ the finance minister wrote.
Earlier, in July this year, Chaldal Limited founder and chief executive officer Waseem Alim in a letter to the finance minister sought the government support for the emerging sector.
In the letter, Waseem said that unlike ITES companies, firms engaged in online sales were not exempted from payment of income tax and had to pay minimum tax that was very burdensome for companies which were investing heavily and making losses.
‘So, we urge the government to reduce the minimum tax to 0.1 per cent of gross receipts for the companies that are incurring losses, and to 0.3 per cent for the companies that are earning profits,’ he said.
He also requested the government to exempt VAT on office rent of e-commerce firms.
E-commerce companies have to maintain spaces for using as warehouses as the companies are not allowed to establish physical sales points.
Although e-commerce is a major sector in other countries, the ecosystem is driven by small businesses and first-time entrepreneurs in Bangladesh.
The e-commerce companies have generated employment for more than 75,000 people and created thousands of high-tech jobs in the country, Waseem said.
Most of the larger e-commercees are incurring heavy losses every year due to heavy investment in infrastructure, he claimed.
‘We are operating in uncharted territories and our only hope is the comparable experience in other countries,’ he said.
The trade of goods online will immensely benefit the country, especially the remote areas, he added.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Miscellany