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E-commerce entrepreneurs demand not to impose VAT for five years

FE Report | Published: June 20, 2019 10:36:03 | Updated: June 22, 2019 11:29:34


Picture used for illustrative purpose

E-commerce entrepreneurs on Wednesday urged the government not to impose Value Added Tax (VAT) on their business for the next five years as the sector is yet to get maturity.

They also suggested framing a long term fiscal policy for such digital businesses to help avoid confusion.

They made the call at a roundtable organised by the Bangladesh Association of Software and Information Services (BASIS) at its office in the city.

BASIS president Syed Almas Kabir, chairman of the trade body's Standing Committee on Digital Commerce Syed Mohammad Kamal, senior vice president Farhana A Rahman and secretary general of e-Commerce Association of Bangladesh (e-CAB) Md Abdul Wahed Tomal spoke on the occasion among others.

Representatives of various e-commerce sites took part in the discussion.

Abdul Wahed Tomal said the size of the country's e-commerce is still very young despite having huge potential.

"Still, there is confusion among many stakeholders about the definition of e-commerce that has made complicated the decision making process regarding taxation on this business," said the e-CAB leader.

If comes into effect, the 7.5 per cent VAT on e-commerce businesses in the coming fiscal year (FY 2019-20) will seriously hamper the sector's growth, he added. The sector currently needs not pay VAT.

Ms. Farhana A Rahman said that imposing VAT on the e-commerce will be equal to double taxation in many cases.

Besides tangible products, e-commerce sites also provide services like doctors' counseling which pay separate taxes, she added.

Ms. Rahman said the proposed move will hamper the government's objective to establish digital Bangladesh and women empowerment.

"E-commerce businesses are still small in size while a good number of women operate such businesses staying at home," she added.

Mr. Almas Kabir said the e-commerce sector deserves the government's special consideration in terms of fiscal policy support.

Responding to a query from the newsmen, he said there is a serious need for framing a long-term policy for the e-commerce sector as the government had proposed VAT on the sector in the last year's budget proposal.

"We have been persuading the government this year in the same way as we did in the last year," he said, adding that creating a 'predictable' environment is vital.

"Ensuring a predictable business atmosphere can also help attract more foreign direct investment (FDI) here," he said. "It would help Bangladesh improve in doing business index."

According to sources, currently the country's e-commerce market size is estimated to be of Tk 10 billion only.

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