Facebook places onus of tax on local advertisers

Local advertisers will have to pay the advance income tax and VAT for advertising on Facebook, after the social media giant refused to take the burden of the taxes introduced in the latest budget.

In a meeting at the Bangladesh Telecommunication Regulatory Commission (BTRC) office, a Facebook delegation from Singapore said they will not pay any taxes on their earnings from advertisements.

Instead, they suggested the authorities to open a new wing with the commerce ministry where advertisers will pay for campaigns they run on the tech giant's platforms. Advance income tax and VAT will be charged at the time of submitting the advertisements, said a source present at the meeting held on Monday.

However, BTRC Chairman Md Jahurul Haque, who was present at the meeting, refused to confirm the matter.

"They assured us that they will follow the tax laws and rules that the country has. But it has not been made clear who will pay the tax – Facebook or advertisers," Jahurul Haque told The Business Standard.

Post and Telecommunications Minister Mostafa Jabbar chaired the coordination meeting with the high-level Facebook delegation at the BTRC auditorium in Dhaka. Secretary to Posts and Telecommunication Ashok Kumar Biswas was also present at the meeting. 

On behalf of Facebook, its Public Policy Director Ashwani Rana, Head of Safety Vikram Langeh, Public Policy Manager Varun Reddy, Sumanta Biswas, Product Level Translator Toby Farnal, Public Policy Manager Risab Dara, and State Manager Matt Ersb Sarnesb took part in the meeting.

Facebook has over 35 million users in Bangladesh and it earns about Tk1,200 crore per year. But Bangladesh is not getting any benefits from this business. 

Razib Ahmed, former president of e-Commerce Association of Bangladesh, said: "It is all about the government's policy. As representatives of the private sector, we must respect whatever the government decides in this regard." 

At the meeting, Mostafa Jabbar urged Facebook to open its business office in Dhaka. But Facebook representatives refused the proposal, said an insider at the ministry. 

However, the social media giant responded positively to the Bangladeshi delegation's request of blocking content that violate Facebook rules. But they said that BTRC has to specify what type of Facebook rules a particular content violates, prior to sending a blocking request.

Meanwhile, Facebook asked that all law enforcement agencies use a single email ID through which they will be able to contact Facebook and ask for information. 

Bangladeshi representatives, however, demanded that separate email IDs be allowed for different agencies. They are also reluctant to send mails through BTRC. 

Mostafa Jabbar also urged Facebook to operate its business in accordance with Bangladesh's norms regarding various issues, including anarchy, pornography, terrorism, rumours, question paper leaks, propaganda and security. 

Bangladesh's new VAT law makes it mandatory for Facebook, Google, YouTube and other digital platforms to either appoint agents or set up offices in Bangladesh from where the government will collect 15 percent in VAT and 4 percent in advance income tax for paid campaigns of local advertisers operating on their platforms.

However, neither of the tech giants have paid any taxes in the past three months.

*Bangladesh not getting any benefits from Facebook's annual Tk1,200 crore business  
* Facebook refused to open any office in Dhaka
* Facebook sought clarification of particular rule violation by content, prior to block request
* Facebook asked law enforcement agencies to use a single email ID for queries
* Facebook urged to operate in accordance with Bangladeshi norms