The NBR has announced that it is forming a team of specialists to bring internet giants such as Facebook and YouTube under taxation
Untaxed advertising on the big Internet companies is siphoning money away from the economy and putting the national media at risk, business leaders have said.
Companies like Facebook and Google and its subsidiary YouTube receive billions in ad revenue from Bangladesh every year but since the companies are not registered in the country, they are not paying any taxes.
People in the tech industry say there are no estimates of how much money is being siphoned abroad since there is no legal channel for payment, but it amounts to billions of taka.
Telecom companies and other big corporate organizations are leaning towards digital ads as well. Telco ads on print have almost disappeared.
Bangladesh Association of Software and Information Services (BASIS) Director and ajkerdeal CEO Fahim Masroor said the members of the trade body are allowed to send $25,000 abroad legally for business purposes.
“Most of the money that is sent out is spent on advertising with Google, Facebook and YouTube. I think this is too low. We should be allowed to send around $40-50,000 annually,” he said.
Fahim remarked that if the businesses were allowed to send more money legally, illegal money transfers would decline.
Major e-commerce organizations spend $8-10,000 monthly for digital marketing, or over $100,000 annually.
Former e-commerce Association of Bangladesh (Ecab) president Razib Ahmed said f-commerce, or Facebook-based e-commerce businesses spend at least $5-10 every day boosting their ads.
“There are about 10-15,000 f-commerce businesses at present,” he said.
The head of a digital marketing agency, who asked not to be named, said: “We provide IT service and get commission on that. The government wants VAT on that commission.”
“We do not take payment from clients, we just collect the ads. Clients pay Facebook and Google directly. They send us commission in return,” he explained.
The business owner supported the government’s initiative to bring online ads under taxation.
“If that is done, the government will be able to earn massive revenues. They will have to be forced to register in Bangladesh. If they do not want to register, they will be barred from showing Bangladeshi ads,” he said.
“Working in this sector, I have seen what a massive amount of money Facebook, Google and YouTube are taking away. Most of this is not going out legally.”
A telecom company official, who wished to remain anonymous, said: “Online ads bring more response. On Facebook and YouTube, we can post not just still images but videos too, and the videos can be longer.”
Although he declined to comment on the company’s digital marketing budget, he said it has been growing every year.
Dewan Kanon, CEO of Solar Electro Bangladesh Limited which brings the Xiaomi brand to local markets, said online ads created much more buzz than traditional newspaper ads.
“Most of our ad budget is for the digital media. This is because young people are on social media all the time,” he said.
There are now 80.83 million Internet users in Bangladesh, of whom 30 million are on Facebook.
Ritesh Mehta, head of South Asia policy programs at Facebook, who was in Dhaka last year, had told the Bangla Tribune that Facebook’s programs in Bangladesh were not meant for profit and the company was doing these to increase social engagement.
He refused to comment on what the company earned from boosting and advertisement in Bangladesh.
NBR to form specialist team
The National Board of Revenue is putting together a high-powered team of specialists to bring Facebook, YouTube and Google under taxation.
NBR Chairman Mosharraf Hossain Bhuiyan said tax officials were working to figure out how to tax the businesses.
Since the businesses were foreign, he said, they must register themselves in Bangladesh.
“An IT expert team will look at how the companies will do that,” he said.
“We have given Facebook, Google and YouTube much leeway. Now we will bring them under the tax net. The next budget will reflect this issue,” Mosharraf said.
Anwarul Huq, an IT specialist, said: “BTRC and the telecom ministry will have to play a role in this.”
Newspaper Owners Association of Bangladesh President and Daily Prothom Alo Editor Motiur Rahman said online ads were pulling away income from newspapers.
“The government has no control over Facebook, YouTube ads. We have sent letters to Bangladesh Bank and the Finance Ministry. Many countries are collecting taxes from these companies. We can help the government with the committee,” he said.
Association of Television Channel Owners Chairman Salman F Rahman said the media was in crisis because of Facebook and YouTube.
“Everyone will benefit if they are brought under a legal framework,” he said.
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