Facebook will appoint a local representative within the next four to six weeks to ensure payment of value-added tax from their advertisement earnings from Bangladesh market, much to the relief of the revenue authority.
The development came in a meeting yesterday between Telecom Minister Mustafa Jabbar and eight Facebook officials.
The Silicon Valley-based company has already floated a recruitment advertisement for ‘Public Policy Manager, Bangladesh’.
“Facebook said they will comply with all the request of the government as soon as possible but it will not be sustainable for them to set up an office in Dhaka right now,” said Md Jahurul Haque, chairman of Bangladesh Telecommunication Regulatory Commission.
Digital advertisement is progressively accounting for a lion’s share of companies’ advertisement budgets, but the National Board of Revenue hardly sees any VAT flowing in from the digital platforms as those have no VAT registration.
Besides, payment for digital ads are mostly made bypassing the banking channels.
Every year, Facebook, YouTube and Google earn more than a thousand crore taka from Bangladesh.
The NBR took the issue very seriously and sought help from the BTRC to ensure that the three tech giants set up shop in Bangladesh.
The commission first asked the three platforms in February to set up offices in Bangladesh, submit a report on their revenue generated from the country and ad-links accounts and payment method. But no response was found.
Then in the new VAT law, which took effect on July 1, the NBR has made it mandatory for the tech giants to either set up offices in Bangladesh or appoint agents such that the government can collect VAT on the advertisements made on their platforms by local firms.
As per rules, the NBR is supposed to get 15 percent in VAT and another 4 percent in advance income tax.
At yesterday’s meeting, which was attended by senior officials from the NBR, Bangladesh Bank, telecom ministry and law enforcement agencies, security issues were discussed too.
Telecom division officials also asked Facebook to sign an agreement to provide security information but the social media giant declined to as such types of deals should be done under government-to-government protocol.
Facebook also promised to promote correct Bangla language on their platform and if needed they will move for partnership with a local university and appoint professors to that end, said meeting sources.
As of August, there are about 9.81 crore active internet connections in Bangladesh, according to the BTRC. There are 3.50 crore active Facebook accounts.