Loading...

No more free lunch: Banks collecting VAT on use of foreign movie channels

| Updated: June 20, 2020 10:35:36


- Reuters file photo - Reuters file photo

Banks have started deducting value added tax or VAT on the subscription of Netflix and other global entertainment platforms after orders from the central bank and the tax authority.

The subscribers of the channels will have to pay VAT at the rate of 15 per cent with retrospective effect from July 1, 2019.

Although the VAT on online entertainment channels was made effective from July 2019, the National Board of Revenue or NBR was getting no taxes, said VAT policy member Masud Sadik.

The VAT wing has requested the Bangladesh Bank to take appropriate measures on June 11, 2020.

The VAT intelligence wing has requested the central bank to ask all banks to ensure payment of VAT by users who make payment through credit cards.

The online entertainment channels include Netflix, Amazon Prime, G-5 etc which are increasingly becoming popular across the world.

VAT is charged on the subscription fees that are paid in foreign currencies, mainly using credit cards.

The VAT Inspection, Intelligence and Investigation wing has sent a letter recently to the deputy governor of Bangladesh Bank Ahmed Jamal requesting for the action.

Syed Mushfequr Rahman, director general of the wing, said the banks could not deduct the VAT because they did not receive any instructions from the banking regulator.

The commercial banks will have to collect the 15 per cent VAT from payment of subscription fees through credit card and deposit it to the government treasury, he said.

Following the letter of VAT intelligence, the BB has instructed banks to collect the VAT from subscribers.

"We are trying to get as much as tax we can, especially in this pandemic, as most of our revenue sources are drying up," said Mr Rahman.

He said online sales of goods and services have increased manifold during the pandemic, but the NBR is not getting revenue. "We are trying other machinery like commercial banks to get hold of the tax dodgers," he added.

As shops cannot be operated like before, many are availing online services, but it is difficult to trace in case of cash transaction, he said. However, it is not possible to hide international transactions made via credit cards, he added.

According to an estimate of the Bangladesh Telecommu-nication Regulatory Commission (BTRC) last year, the US-based Netflix earns more than Tk 1.80 billion from Bangladesh.

However, the number of subscribers increased significantly during COVID-induced lockdown that lasted for more than two months.

The Video On Demand service Netflix picked up nearly 16 million global subscribers in January-March period due to stay-at -home orders in different countries.

The coronavirus pandemic appears to have led millions to hook onto Netflix and other channels for deriving pleasure while reducing stress level.

The BTRC estimates that Bangladesh has more than 200,000 subscribers of Netflix alone. The live-stream platform has almost 150 million subscribers in 190 countries across the globe.

[email protected]

Share if you like

Filter By Topic