The National Board of Revenue (NBR) has forwarded letters to all commercial banks to collect 15 per cent value added tax (VAT) from online advertisements placed by local companies on social media like Google, Facebook and YouTube.

The letters were issued to the banks on Monday, asking them to collect 15 per cent VAT when advertisers make the payments to social media platforms abroad.

The NBR has also directed its field offices to monitor Google and Facebook.

Matiur Rahman, LTU-VAT commissioner of the NBR, said: “We've directed commercial banks to collect 15 per cent VAT when advertisers make the payments to social media like Facebook, Google and YouTube. Initially, the banks will collect the VAT and submit it to the NBR. Later, we'll directly bring Facebook, Google and YouTube under the VAT net.

“It'll also be monitored whether the advertisers make the payments through any alternative channels outside the banking sector,” he added.

He also said if someone goes abroad to pay for advertising on Facebook, Google, or YouTube, it will be considered as money laundering.

NBR chairman Mosharraf Hossain Bhuiyan said: “We’ll realise the VAT mainly from those organisations that rely on online platforms for their advertisements. But we’ve a plan to take necessary steps so that such advertising platforms can be registered in Bangladesh by establishing offices in the country.”

The decision to impose VAT on online advertisements on social media is going to be taken following pleas from the Newspaper Owners’ Association of Bangladesh (NOAB) in 2017, although e-commerce sites of the country have been running their businesses for a decade.

Earlier, the NOAB had sent a letter to different ministries, Bangladesh Bank (BB), NBR, and the Bangladesh Telecommunication Regulatory Commission (BTRC), saying Facebook and Google have no offices in Bangladesh and remain beyond the purview of the country's law.

The letter mentioned that Facebook and Google are not paying taxes even after earning huge sums of money from digital advertisements in the country.

A large number of local firms, including multinational companies operating in Bangladesh, put up advertisements on social to promote their goods and services.

EA