Online entrepreneurs demand VAT exemption
The country’s top online shop entrepreneurs yesterday said the industry would turn into the largest contributor to the national exchequer if the government exempts value-added tax on their business for at least five to seven years.
They said tax-related uncertainties not only create a huge burden for the digital commerce industry but also challenge its existence.
They were addressing a roundtable styled “Impact of New Tax on Digital Commerce” organised by the E-commerce Entrepreneurs and Consumers at The Daily Star Centre in Dhaka.
In the budget for 2019-20, the finance minister proposed imposing 7.5 percent VAT on virtual businesses, e-commerce to be specific.
Mohammad Rassel, chief executive officer of evaly.com.bd, said five to seven years would allow them to contribute over a billion dollars in VAT.
The entrepreneurs demanded at least three years’ tax exemption, saying citizens have been getting requests to adopt a digital life for the last couple of years but now this vision seemed to be turning blurry.
Abdul Wahed Tomal, general secretary of the e-Commerce Association of Bangladesh (e-CAB), said the National Board of Revenue has been trying to impose tax on the e-commerce industry for the last few years and the industry has resolved it through negotiation.
“But this can’t go on years after years. Now, we want an end to this situation and demand a long-term tax exemption for the sake of the government’s Digital Bangladesh vision,” he said. “We have got a clear political mandate about digitalisation but in most cases we found state bodies are not in line with the government’s vision,” he added.
Tomal said Commerce Minister Tipu Munshi and State Minister for ICT Zunaid Ahmed Palak had already written to the NBR to consider the industry’s demand.
Moderating the session, Ashikul Alam Khan, CEO of priyoshop.com, said they were not only doing business but also trying to establish an ecosystem that would digitalise all stakeholders and ensure transparency.
“The government should promote e-commerce to ensure transparency as well,” he said.
The government is providing tax holiday to the IT industry up to 2024 and despite being much more, digital commerce is not getting any benefit, said Khan.
Demanding a long-term policy, AKM Fahim Mashroor, CEO of ajkerdeal.com, said the tax policy was shortsighted and such anarchy on the industry was created during budget proposals every year.
Mahmudul Hasan Sohag, chairman of OnnoRokom Group, the parent company of rokomari.com, said there was no alternative to digital commerce if the government wanted to ensure transparency in business and the financial sector.
Charging VAT on this section of business may send out a negative signal to everyone, he said.
Zia Ashraf, co-founder of chaldal.com, said local entrepreneurs had already raised more than Tk 1,000 crore from foreign investors presenting this market’s prospects and growth rate.
“Now how can we explain this 7.5 percent VAT to the foreign investors?” he asked, stating that the proposed VAT would negatively brand the country in the digital world.
Maliha Quadir, founder and managing director of shohoz.com, said the proposed VAT would raise service cost and bring about damaging effects as the market is very price sensitive.
“We came to the digital business with a big vision and the new tax will shake up our dreams,” she said.
Referring to giant e-commerce platforms like Amazon, Syed Mohammad Kamal, chairman of the digital commerce standing committee of the Bangladesh Association of Software and Information Services, said growth was impossible without government support.
The discussants said the government promised to create an additional three crore new jobs and only e-commerce could create about 10 lakh jobs within a short time with government support.
They said annual e-commerce sales amounted to about Tk 1,000 crore. Although the new VAT rate would bring in only Tk 75 crore for the government, it will destroy the whole industry.
