NBR eyeing VAT from streaming platforms
Netflix and Amazon Prime have become household names in Bangladesh as the ongoing coronavirus pandemic has forced people to take shelter at home with little to do other than watch movies.
These two online streaming platforms are paid services, meaning there should be a 15 per cent value-added tax on the subscription fee.
But the National Board of Revenue (NBR) is being deprived of the subscription fee, said Syed Mushfequr Rahman, director general of the VAT Audit, Intelligence and Investigation Directorate, a department of the NBR.
The NBR department made these remarks after learning that customers in Bangladesh pay their subscription fees for these online entertainment platforms, including ZEE5, in foreign currency.
Both Netflix and Amazon Prime, two of the world's most popular streaming services, are based in America but charge the equivalent of $10-15 in local currency for subscribers in other parts of the world.
In Bangladesh however, all online streaming platforms only accept payments in foreign currency, forcing many customers to endorse dollars against their credit cards to make digital payments.
According to the guidelines, VAT is applicable for online streaming services under the miscellaneous category.
Banks can collect the VAT when a client charges their credit card to pay a subscription fee before depositing the sum with the state exchequer.
"But banks cannot do so without instructions from the Bangladesh Bank," said Rahman in a letter to the central bank.
In his letter, the director general asked the central bank to direct banks to begin deducting VAT when subscription fees are paid through cards.
However, the NBR department could not ascertain the exact number of online streaming platform subscribers in Bangladesh or how much revenue has been lost until now.
With 183 million paid memberships in over 190 countries, Netflix is a popular entertainment service with a host of television series, documentaries and feature films to select from.
Subscribers can enjoy any movie or series from Netflix's library anytime, anywhere so long as they have a suitable device, such as a smartphone, and connection to the internet.
Meanwhile, Amazon Prime is a concern of global e-commerce giant Amazon. Other than streaming services, Amazon Prime offers delivery services, books and more.
A senior official of the NBR's VAT Policy also said that in the past, they had asked the BB to direct banks to collect VAT for the purchase of online streaming services like Netflix.
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