Black_cats
ELITE MEMBER
- Joined
- Dec 31, 2010
- Messages
- 10,031
- Reaction score
- -5
Digital economy
Bangladesh e-commerce market to grow over $10b by 2026
Staff CorrespondentDhaka
Published: 30 Apr 2023, 11: 20
Centre for Policy Dialogue distinguished fellow Debapriya Bhattacharya speaks at a dialogue on "Taxing the Digital Economy: Trade-Offs and Opportunities” jointly organized by CPD and European Union at Bangabandhu International Conference Center in the capital's Agargaon on 29 April 2023.Prothom Alo
The size of local e-commerce market will grow by $400 billion to $10.50 billion in the next four years in 2026 from $660 billion at the end of 2022, according to the Centre for Policy Dialogue (CPD).
A reform is essential on revenue administration to increase tax collection from digital economy in addition to rationalsing taxes, the private research organisation said.
The CPD revealed the data at a dialogue on "Taxing the Digital Economy: Trade-Offs and Opportunities” jointly organized by CPD and European Union at Bangabandhu International Conference Center in the capital's Agargaon area on Saturday.
Speakers at the event emphasised both expansion of digital company as well as tax collection for this sector.
Tax collection is yet to reach the target despite expansion of digital economy, and easing of tax payment method will bring good result, but harassment must stop in addition to taking initiative to collect tax from foreign companies such as Facebook, Google and Amazon.
CPD distinguished fellow Mustafizur Rahman revealed the data during a presentation at the event while presenting a keynote paper on the digital economy in Bangladesh with CPD executive director Fahmida Khatun in the chair.
Mustafizur Rahman gave several examples on expansion of digital economy and unrealised taxes.
He said, “In recent past years, non-resident tech giants (Facebook, Google, Amazon, etc.) are expanding their reach in Bangladesh and this trend is expected to continue in future. Bangladesh is one of the top three countries where people are most active on Facebook. India and Philippines hold the first and second positions respectively.”
Till now, nine non-resident companies including Facebook, Google and Amazon paid a VAT amount of Tk 577.2 million in 2021-22 fiscal year while the total revenue of Tk 3.85 billion received by National Board of Revenue in 2021-22 fiscal, he added.
The keynote paper mentioned digital ad spaces, according to sector insiders and the Association of Television Channel Owners (ATCO), receive commercial ad worth at least Tk 20 billion from Bangladesh through Facebook, Google, Amazon, and other internet-based firms every year.
As reported by BTRC in June 2019, five mobile phone operators of Bangladesh paid internet-based firms including Google and Facebook Tk 87.50 billion in advertisement revenue over five years, but NBR mentioned the amount was about Tk 1.33 billion only.
In Bangladesh, revenue from OTT (over-the-top) video streaming platforms is projected to reach $152.7 million in 2023 and the number of users is projected to reach 11.3 million by 2027.
Netflix has around 200,000 subscribers in Bangladesh with earnings of about Tk 2 billion as subscription. Besides, there is a rise in local OTT platforms like Chorki, Bioscope and Toffee. Bangladesh ranks eight among the top 10 countries for freelancing income with a growth rate of 27 per cent.
At present, the government provides various tax holidays and cash assistance. Though tax exemption on IT sector is set to be lifted in June this year, yet a VAT of 15 per cent remains on the sale of products on digital platform.
What speakers said
Addressing the event, lawmaker Kazi Nabil Ahmed said companies like Facebook and Google have a shadow in the country, but they don’t have a structure here, these companies must have office in the country. On top of that, the administration needs to be made more competent to raise tax collection from digital economy.Lawmaker Ahsan Adelur Rahman said a political will is a must for any reform. The coronavirus pandemic became as boon for digital economy with the sector witnessing a 50 per cent growth, but sources of income generation could not be known many a time in digital economy, creating difficulties in tax collection, he added.
The National Board of Revenue is reluctant to carry out reform on raising tax collection and the non-resident companies should open office in Bangladesh, vice-president of Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) Mostafa Azad Chowdhury observed.
Bangladesh Association of Software and Information Services (BASIS) director Habibullah Neyamul Karim said digital company would control entire economy in future, and tax exemption should increase in IT sector till 2030 so that foreign companies like Daraz cannot take the advantage of digital economy.
“If I want to know whether I pay the tax, I myself have to go to the NBR and prove it. If NBR officials cannot keep documents of tax payers, they should face legal action,” he added.
There would be more entrepreneurs in IT sector once a hassle free tax system can be built, e-Commerce Association of Bangladesh (e-CAB) vice president Mohammad Sahab Uddin observed.
Bangladesh Freelancer Development Society chairman Tanjiba Rahman said when a freelancer earns Tk 100 he/she receives only Tk 30 after paying taxes and other fees.
Former NBR chairman Mohamamd Abdul Mojid said why tax-GDP ratio has not increased in so many years should be known and when a problem is found out, it becomes easy to solve.
‘Surrender’ to sovereignty of policies
Terming the loan programme of International Monetary Fund a ‘surrender’ to sovereignty of policies, CPD distinguished fellow Debapriya Bhattacharya said, “We have at least surrendered in several fields of the sovereignty of policies and we have taken the money following their terms.”He said, “There are similarities between today's discussion and at least three conditions of IMF.
The first one is to increase tax-GDP ratio, in which the country will have to collect an additional amount of tax revenue than the regular figure at a rate of at least 0.5 per cent of its GDP and the second one is to rationalise tax-exemption. These two issues can be implemented through order, but the third one – to increase administrative capacity in tax collection – cannot be implemented through order. Lots of efforts will be needed to fulfil this condition.”
“These issues were supposed to be implemented in the past, but we could not do so. Economists, businesspersons and professionals are working to make this happen, but it will have to implement now, and that is the reality,” Debapriya Bhattacharya said.
Bangladesh e-commerce market to grow over $10b by 2026
The size of local e-commerce market will grow by $400 billion to $1,050 billion or approximately Tk 1.20 trillion in 2026 from $660 billion or approximately Tk 410 trillion by the end of 2022, according to CPD
en.prothomalo.com
