The government has proposed 4% value added tax on online trading of goods and services for the fiscal year 2015-16.
Finance Minister AMA Muhith made the proposal at parliament while presenting budget for the year.
“Trading of goods and services online is now being recognised and established as a very popular mode (of business),” he said.
Although this sector is not exempted from VAT right now, no exact definition of this service is currently there in the existing VAT system, Muhith added.
“Hence, I propose to define this service under the VAT system as well as propose to impose VAT at the rate of 4% on this service sector.”
At present, there are about 50 entrepreneurs, who actively operate the business. Besides, there are some small traders.
The people related with online trading business criticised the move.
“The e-commerce of the country is at early booming stage and imposing VAT on trading goods and services on internet will discourage consumers,” Sadequa Hassan Sejuti, managing director of Future Solution for Business (FSB) Limited, told the Dhaka Tribune. FSB Ltd is a specialized IT service company.
She said at present the e-commerce entrepreneurs are struggling to secure breakeven and need policy support to grow, but the government is imposing VAT on the new born sector.
“Give us opportunity to grow up and we will provide returns to the government exchequer,” Sadequa said.
According to her, the farmers are getting fair prices for their products and the consumers are getting fresh and organic vegetables and other items due to growth of the internet-based business.
She said if VAT was imposed, the traders would lose interest in the system.
Uttam Kumar Paul, secretary general of Bangladesh Association of Software and Information Services (BASIS), said: “In the budget recommendations, BASIS requested the government not to impose VAT, but the government has proposed 4% VAT on online trading, which will affect prospect of the e-commerce.”
He said they would meet the government and call for withdrawal of the VAT proposal “for the sake of the future of the sector.”
