Experts dub proposed VAT on e-commerce suicidal

Budget for FY2018-19 to be announced today

It would be a suicidal move for the government to impose a 5 per cent value added tax (VAT) on e-commerce services for the first time in the proposed budget for FY2018-19, say industry experts.

The budget will be announced today.

Razib Ahmed, former president of the e-Commerce Association of Bangladesh (e-Cab), told The Independent that any VAT on online transactions will negatively impact the e-commerce industry. “It'll discourage consumers to purchase online. It'll also have a seriously negative impact on small and medium entrepreneurs,” he said.

 The new move will prioritise cash on delivery as both merchants and consumers would want to avoid the online payment option, he noted.

"People of small towns and some villages were just beginning to enjoy the benefits of e-commerce. They were finally getting their desired products and services from Dhaka. But the new VAT would seriously damage this social inclusion," he added.

Bangladesh Association of Software and Information Services (BASIS) president Syed Almas Kabir said: “E-commerce business has been flourishing rapidly in the country with diversified products and services. This is a relatively new sector. It takes 10-12 years for an industry to grow.”  

The proposed VAT on e-commerce should be abolished because e-commerce entrepreneurs take a lot of risk to sustain their respective businesses, he added.

Kabir pointed out that they spend a great deal of money in digital advertising and marketing strategies to attract consumers. The VAT would act as an disincentive to both entrepreneurs and buyers, he observed.

"Global companies, including Alibaba, have recently entered Bangladesh. The VAT would be a disincentive for them as well," he said.  

Fahim Mashroor, co-founder and chief executive officer (CEO) of Bdjobs and AjkerDeal, told The Independent that almost all the e-commerce companies in Bangladesh are hardly seeing any profits. "So, it would be difficult to run such businesses if the new VAT is indeed implemented," he said.

“No other country, including the US, has imposed any VAT on e-commerce. So, it would be a suicidal decision for the e-commerce industry, especially because it has not matured into a full industry yet,” said Fahim Mashroor.   

He also said those running e-commerce businesses on Facebook would not be affected as they neither have any registration number nor do they pay VAT. “But we will have to pay the VAT since we are registered as an e-commerce firms,” he added.

Over 1,000 websites along with around 3,000 Facebook pages are now delivering online shopping services, said industry insiders.

Finance Minister Abul Maal Abdul Muhithanounces the national budget for the 2018-19 financial year (FY19) today. This will be t he country’s 47th budget and the 19th of the Awami League government while the 12th for Muhith.

EA

 

Experts dub proposed VAT on e-commerce suicidal

Budget for FY2018-19 to be announced today

It would be a suicidal move for the government to impose a 5 per cent value added tax (VAT) on e-commerce services for the first time in the proposed budget for FY2018-19, say industry experts. The budget will be announced today. Razib Ahmed, former president of the e-Commerce Association of Bangladesh (e-Cab), told The Independent that any VAT on online transactions will negatively impact the e-commerce industry. Itll discourage consumers to purchase online. Itll also have a seriously negative impact on small and medium entrepreneurs, he said. The new move will prioritise cash on delivery as both merchants and consumers would want to avoid the online payment option, he noted. People of small towns and some villages were just beginning to enjoy the benefits of e-commerce. They were finally getting their desired products and services from Dhaka. But the new VAT would seriously damage this social inclusion, he added. Bangladesh Association of Software and Information Services (BASIS) president Syed Almas Kabir said: E-commerce business has been flourishing rapidly in the country with diversified products and services. This is a relatively new sector. It takes 10-12 years for an industry to grow. The proposed VAT on e-commerce should be abolished because e-commerce entrepreneurs take a lot of risk to sustain their respective businesses, he added. Kabir pointed out that they spend a great deal of money in digital advertising and marketing strategies to attract consumers. The VAT would act as an disincentive to both entrepreneurs and buyers, he observed. Global companies, including Alibaba, have recently entered Bangladesh. The VAT would be a disincentive for them as well, he said. Fahim Mashroor, co-founder and chief executive officer (CEO) of Bdjobs and AjkerDeal, told The Independent that almost all the e-commerce companies in Bangladesh are hardly seeing any profits. So, it would be difficult to run such businesses if the new VAT is indeed implemented, he said. No other country, including the US, has imposed any VAT on e-commerce. So, it would be a suicidal decision for the e-commerce industry, especially because it has not matured into a full industry yet, said Fahim Mashroor. He also said those running e-commerce businesses on Facebook would not be affected as they neither have any registration number nor do they pay VAT. But we will have to pay the VAT since we are registered as an e-commerce firms, he added. Over 1,000 websites along with around 3,000 Facebook pages are now delivering online shopping services, said industry insiders. Finance Minister Abul Maal Abdul Muhithanounces the national budget for the 2018-19 financial year (FY19) today. This will be t he countrys 47th budget and the 19th of the Awami League government while the 12th for Muhith. EA