• Thursday, Nov 14, 2019
  • Last Update : 02:45 pm

e-CAB seeks 5-year VAT holiday

  • Published at 10:58 pm June 25th, 2019
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E-businesses aim to create 1 million jobs, increase purchasing power

The e-Commerce Association of Bangladesh (e-CAB) has urged the government to exempt VAT (Value Added Tax) for the country’s rising e-commerce sector for the next five years.

Leaders of the platform also noted that it is high time to build this emerging e-commerce sector by allowing it to grow and attract more consumers.

“It is time to establish this industry, not to impose VAT on it. If VAT is imposed then it will lose consumers and the government will miss the opportunity to earn revenue and tax from this sector,” they said at “Budget opinion,” a discussion on the proposed national budget at La-Vinci Hotel in the capital on Tuesday.  

In the proposed 2019-20 budget, the government planned to impose a 7.5% VAT on online-based businesses. State Minister for Post, Telecommunications and Information Technology Zunaid Ahmed Palak said he had requested the National Board of Revenue (NBR) in writing, to withdraw the proposed 7.5 % VAT for the e-commerce industry.

“E-commerce traders already pay VAT when they buy their goods. However, if VAT is imposed again on the sector, then they will have to pay double tax. This will turn many entrepreneurs away from doing business online, putting the sector at risk,” said E-Cab President, Shomi Kaiser, at the discussion.

Speakers at the event said imposing VAT on the industry might also hinder the government’s plans for a digital Bangladesh, adding that the rising sector will create more jobs, ensure accountability, and increase the purchasing power of consumers, which will generate more revenues.

“Maybe the government can choose to bring global digital giants like Facebook or Google into its VAT net. But a 7.5% VAT has been proposed for digital businesses in the country,” she added.

“We also demand that we be given a new services code, keeping our old SRO (Self-Regulatory Organization-S099.50), and all online products and services should be considered and defined by the National Digital Commerce Law-2018, and the recently published Bangladesh Gazette,” she added. 

Saying the sector has not only produced new entrepreneurs, the e-CAB president noted that 30% of the sector's workforce are women. 

 “We have held talks with the finance minister, the ICT state minister, the prime minister’s private advisor, and the NBR, for withdrawal of the proposed VAT. We hope to hear some positive news in this regard soon,” Shomi said. 

“If we receive the proper support, then this sector will surpass the RMG (Readymade garments) sector in contributing to the country’s GDP,” she added.

What is the e-CAB aiming for?

In a written speech, e-CAB General Secretary Abdul Wahed Tamal said: “Imposing VAT will have a negative impact on sustainable growth of the sector and in generating new employment opportunities.”

“We are working to create one million new jobs in the next 3 years, with some 50,000 entrepreneurs currently engaged in this sector,” said Tamal.     

“A clear definition of e-commerce is badly needed and our demand should be met for VAT exemption for businesses that do not have a physical store and only sell products online. Otherwise these businesses will have to pay double tax, making it costlier to run, discouraging online shopping and shoppers,” he added. 

“We do not want any incentives.  Rather we only want a scope to establish and boost this sector,” said Online shop Sindabad.com CEO, Zeeshan Kingshuk Huq, replying to questions. 

Rokomary.com CEO Mahmudul Hasan Shohag said: “The production level remains VAT free, and there is only a 5%VAT for offline businesses, but a 7.5% VAT is proposed for online businesses!”

Representatives of various online shops and others were present at the event.