Facebook, Google must open office in Bangladesh
Industry Desk: Bangladesh has a big potential in digital economy but it cannot seize the opportunity for absence of adequate policy, economists, policymakers and IT experts observed on Saturday.
Tech giants like Google and Facebook must be compelled to open their office in the country to realize taxes from them as they are doing ample business here, they said.
“Large institutes like Facebook and Google are doing business in the country but they have their shadow here; not the body. It has made it difficult to tax them. They must have their local representative in Bangladesh,” said Lawmaker Kazi Nabil Ahmed.
He was speaking as the chief guest at a dialogue on ‘Taxing the Digital Economy:
Trade-offs and Opportunities,’ organized by Centre for Policy Dialogue (CPD) is association with the European Union.
At present, non-resident digital service providers are not under the tax net of the NBR and they are not liable to submit their tax returns in Bangladesh. They do not have any TIN.
“Legal provisions will need to be put in place for non-resident businesses to get Taxpayer Identification Number (TIN) in order for them to submit tax returns,” CPD Distinguished Fellow Prof Mustafizur Rahman said while presenting a paper.
This should be addressed by taking required initiative in the upcoming finance act for the Fiscal Year (FY) 2023-24, he pointed out.
“We’ve entered IMF programme, where some targets have been set for us. We’ve to mobilize Tk 2.5 trillion new taxes in the next three years,” the economist noted.
In 2022, size of e-commerce market was $6.6 billion which will rise to $10 billion in 2026, Prof Mustafizur informed.
According to E-CAB data, the number of e-commerce platform is some 2,500, 95 percent of which are small in size. There are some 4,500 software companies in the country and more than 400 of them exports software in more than 80 countries.
Bangladesh is now at the 8th position in terms of freelancing with some 36,800 people engaged in the job, while the number of OTT subscribers is set to cross 10 million by 2027.
But there is no actual data about the revenue generated by Google, Facefook and You tube from advertisements, the dialogue was informed.
Echoing the same, BASIS director Habibullah Niamul Karim in near future there will be no division between formal and digital economy, adding that revenue should be collected from some small and medium companies which are involved in cross border transactions like Google and Facebook.
Prof Mustafizur Rahman said: “Now time has come to rethink tax exemptions given to 28 IT sub-sectors. Many large local companies are giving advertisement on Facebook and Google. Although they are paying VAT but not Tax, which has sparked movement across the globe.”
He recommended ensuring transparency in digital economy, putting in place legal framework for F-commerce, introduction of new service code, automation of NBR and introducing Paypal service in the country, among others.
Dr Debapriya Bhattacharya suggested developing proper business model to cash in on the digital economy potentials, citing that digital transactions are very small, which makes it hard to collect revenue from each transaction.
He also called for making tax collection system from digital economy transparent, neutral, fair, efficient and simple.
Speakers said NBR’s capacity must be increased and its activity should be made fully automated to raise tax collection and raise tax-GDP ratio.
They questioned about the effectiveness of tax exemptions and incentives enjoyed by different sectors and called for bringing reforms to the NBR.
Lawmaker Ahsan Adelur Rahman also spoke at the event moderated by CPD executive director Dr Fahmida Khatun.
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