Online shopping is set to become pricier as the budget proposes imposing VAT on e-commerce.
Finance Minister AMA Muhith has proposed a 5 percent VAT on ‘virtual businesses’ based on internet, social media and mobile apps.
“In order to bring these online based virtual businesses within the tax net a new service code has been defined as Virtual Business,” he said in his budget speech.
The finance minister also proposed to introduce new provisions in the laws on the taxing revenues earned in Bangladesh by digital companies, like Facebook, Google and YouTube.
“Such measure shall expand our tax base,” he said in the speech.
The minister said many foreign entities are earning in Bangladesh through virtual and digital transactions, but the country is not getting adequate tax from them.
“Since these virtual and digital business transactions are comparatively new, our tax laws were not sufficiently up-to-date to bring all virtual transactions into tax net,” he said.