To get local commercials from the upcoming fiscal (FY20), these platforms will have to inform the NBR in written before July 1 about the appointment of their agents
Virtual media, including foreign television channels, radio, Facebook, YouTube, Google and WhatsApp, from now on cannot take advertisements from sources except for their local agents approved by the National Board of Revenue.
To get local commercials from the upcoming fiscal (FY20), these platforms will have to inform the NBR in written before July 1 about the appointment of their agents.
The VAT Department of the country's revenue authority, in a directive, said all these on Wednesday.
The directive was issued for revenue protection and lawful VAT realisation, according to the NBR.
As per the VAT and Supplementary Duty Act, these non-Bangladeshi companies from the upcoming fiscal year will have to pay value-added tax (VAT) at a rate of 15 percent on advertisements they will take from the country.
As of today, the government organisation was not being able to realise VAT from these companies, although the 1991 VAT law empowered it to collect 15 percent VAT from them.
Moreover, it had no control over these firms as transactions were not made directly through the banking channel.
In 2017, the NBR, in this regard, wrote letters to commercial banks but failed to get any positive feedback.
Against this backdrop, the NBR has now made it mandatory for non-Bangladeshi firms to collect ads through their approved agents in the country.
The directive, signed by NBR first secretary Hasan Muhammad Tarek Rikabder, also said any VAT advisor, members from the ICAB, ICMAB and Bangladesh Bar Council, assistant commissioner or officials ranked similar to NBR officers or above, and FBCCI-approved representatives of any business firm can work as an agent as per the VAT law.
Tarek Rikabder told The Business Standard, "The 1991 law fixed 15 percent VAT on local advertisements broadcast by foreign channels. However, NBR could not realise VAT as these firms did not have their own office or agent in Bangladesh."
"These firms have now been asked to appoint agents. If they publish or air local advertisements collecting them without appointing local agents, legal actions will be taken against these firms through BTRC (Bangladesh Telecommunications Regulatory Authority)," he said.
Sources said advertisements worth more than Tk2,000 crore are shown annually on different online-based digital media platforms.
However, a Bangladesh Bank report says local banks, in the last four years, realised Tk67 crore as VAT from advertisement transactions in foreign firms.
The report also says that a major part of the transactions was performed through non-banking channels.