Tax on FB, Google, YouTube, but instrument missing

Finance minister Abul Maal Abdul Muhith on Thursday proposed to introduce new provisions in tax laws to realise tax from tech giants - Facebook, Google and YouTube etc - for their earning in Bangladesh.

There is a provision for imposing 15 per cent value added tax (VAT) on advertisements on the social media sites but the government has no instrument to collect such tax.

The country’s "tax laws were not sufficiently up-to-date to bring all virtual transactions into tax net," the 85-year-old minister told parliament in his budget speech.

“Many foreign entities are earning income in Bangladesh through virtual and digital transactions, but we are not getting adequate tax from them,” he pointed out.

Muhith proposed to "to introduce provisions for automatically sharing data of other departments and agencies with tax department".

“This measure will be very useful in combating tax evasion,” he said and emphasized following international good practice while making provisions for taxing the online entities.

Imposing tax on IT giants has come to the fore since the High Court on 12 April ordered the government to realise revenue from internet-based service organisations for all kinds of transactions.

In its order, the court particularly named several California-based US technology giants -- Google, Yahoo!, Facebook, YouTube -- and Washington-based US e-commerce company Amazon.

The government was asked to collect all types of revenue, including tax at source and other duties, from all types of transactions, including advertisements, domain selling and licence fees from the international internet platforms.

The multinational web giants pay few taxes in Europe, for instance.

The Newspaper Owners' Association of Bangladesh (NOAB), in its budget proposal, demanded developing mechanism to bring Facebook and YouTube under the tax net. “They should share a portion of their incomes with the state," NOAB said in a letter.

Source: Prothom Alo