Global social media giants and foreign satellite television channels operating in Bangladesh without having offices will face 15 per cent value-added tax on their digital services including advertisement for foreign products from July 1.
Foreign television channels and tech companies not having offices in the country, which are known as non-resident in the VAT law, will have to take business identification number (BIN) and appoint VAT agent locally to maintain VAT-related documents and records and payment of VAT, officials of the National Board of Revenue said.
They said that the measure would ensure VAT collection from advertisements for foreign products.
VAT wing of the NBR on Wednesday requested the information ministry and the Bangladesh Telecommunication Regulatory Commission to request in writing the service providers such as foreign satellite channels and global social media giants including Google, Facebook, Youtube, Messenger and WhatsApp, for appointing VAT agents and obtaining BINs (known as VAT registration number).
In the letter, the NBR said that the VAT and Supplementary Duty Act-2012 imposed VAT and SD on broadcasting services received from televisions and radios in the country, and digital services provided to any resident of the country.
VAT and SD, if applicable, will be imposed from the date of enforcement of the law, it said.
Officials said that VAT on advertisements given by any local advertisers and companies through foreign television channels and global tech companies had been imposed in July, 2018.
Now VAT will also be applicable to advertisements for foreign products on social media and broadcasted on satellite channels, they said, adding that satellite channels such as Zee Bangla, Star Jalsha, Star Sports and all other foreign channels airing advertisements in Bangladesh will come under the purview of the provision of the law.
They said that the NBR issued the directive to the information ministry and the BTRC and they were the regulatory bodies in the respective sectors.
The letter was sent to the information secretary and the BTRC chairman.
The BTRC and the information ministry will be able to take punitive actions including suspension of operation of the companies for non-compliance with the VAT law, they added.
The directive said that the non-resident service providers should appoint VAT agents for providing services, including advertisements, message, voice and other similar services, through the media.
According to the VAT law, a non-resident will have to appoint a VAT agent if he or she doesn’t operate economic activities from a specific place of the country.
VAT agent will take all responsibilities of the non-resident and conduct VAT-related activities on behalf of the non-resident, the law said.
VAT agent will also be responsible, individually and jointly with the non-resident, for payment of VAT, penalty and other taxes.
The NBR will determine the conditions, role and responsibilities of VAT agent.
A senior NBR official told New Age said that the measure would ensure revenue collection from the sector as well as create a level-playing field for local and foreign television channels.
Some local companies also air their advertisements on foreign channels, he said.
But, local television channels pay VAT on advertisements while foreign channels don’t pay VAT for the service, which creates uneven competition, he added.
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