Digital campaigns in murky waters
Digital marketers and e-commerce companies demanded bringing transparency in media expenditures and eradicating “unfair market competition” for the sake of creating a digital society.
Local companies are annually spending about Tk 2,000 crore behind digital campaigns, roughly 30 per cent of which is being transacted through legal banking channels, ultimately depriving the government of a huge amount of revenue, they said at a roundtable yesterday.
The companies which are indeed paying huge amounts in VAT are finding it hard to get rebates as the process to claim it is complex and very much dependent on whimsical NBR officials, they said at the discussion titled “Digital advertisement in foreign platforms” at The Daily Star Centre in Dhaka.
The International Media Buying Companies and Owners Initiative (IMBCOI), a platform of the companies running digital advertisements for different entities, organised the discussion with support from The Daily Star.
They said currently a few hundred agents were running digital campaigns for giant entities while about three lakh entrepreneurs were spending for digital advertisements as part of running businesses on Facebook.
“We have fallen in an unfair competition from the international companies that are running their business in Bangladesh,” said AKM Fahim Mashroor, chief executive officer (CEO) of shopping platform ajkerdeal.com.
Running a Tk 100 campaign from Bangladesh requires paying Tk 143.75 though the legal channel, he said. But there are companies in Bangladesh making just the Tk 100 payment ignoring the VAT and taxes, meaning they are staying ahead of the competition with an illegal advantage, he added.
“We will not survive unless this unfair competition is eliminated from the market,” said Mashroor sharing a presentation and moderating the event.
Ashikul Alam Khan, CEO of priyoshop.com, said the Tk 600 crore being paid through the legal channel represented a tiny part of Facebook and Google’s market here.
The remaining Tk 1,400 crore will never come under Bangladesh’s books, he added.
“Our policymakers can also consider another way. We are now paying 43.75 per cent tax and if the government reduces it and makes the process simpler, that might have a positive impact both in terms of government revenue and compliance,” said Khan.
Khan also mentioned that while digital companies such as Uber, Daraz and Foodpanda were paying their digital campaign bills from abroad, local companies were claiming that the process was, in effect, money laundering.
“We don’t know how much money exactly they are spending for that, so who can say if the market size of Bangladesh’s digital campaigns is not Tk 5,000 crore?” he questioned.
Muhammad Risalat Siddique, chairman of digital and social media marketing agency Analyzen, said there was no level playing field when it came to digital spending.
“Companies that want to be compliant will have to pay extra,” said Siddique, also chairman of the standing committee of the Bangladesh Association of Software and Information Services (BASIS) on digital marketing.
He urged the government to simplify the process to help companies be compliant.
Ashish Chakraborty, director and chief commercial officer of SSL Wireless, said the process was so complex that companies would have to “spend more” to comply with regulations of Bangladesh Bank and the National Board of Revenue (NBR).
“I am quite certain that if we can simplify the process a bit more, more companies will use the standard authenticated channel and that will help to ensure bringing in government revenue,” he added.
Chakraborty also proposed formulating a separate tax structure for local and international companies. This was seconded by Risalat Siddique.
ABM Jabed Sultan, head of digital business of Prothom Alo, said there were currently about 1,800 Bangladeshi websites earning from Google.
However, it is just 8 per cent of what Google was earning from the country, he added.
Waiz Rahim, CEO of Deligram, said the law of the land was so complex that local companies found it confusing to comply with it.
“We, the digital commerce industry, need end-to-end support from the government, like that provided to the garment sector, and the ICT ministry can play a role here,” he said.
Rahim said the NBR, with its process and law complexities, was trying to “squeeze the blood flow” of Digital Bangladesh.
Md Saimum Hossain, assistant professor of finance at the University of Dhaka, said the difference between unfair competition and fair play and compliance and noncompliance were slowly eroding.
Awareness needs to be ensured to ensure compliance alongside simplification of the process, he said.
Mastercard Country Manager Syed Mohammad Kamal and Mindscape Director Akif Ahmed attended the discussion.
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