Online shopping getting costlier for VAT slap

Amid growing popularity, online shopping is getting costlier soon for the proposed value added tax (VAT) imposed on it in the budget for fiscal 2019-20.

Customers will have to pay 7.5 percent value added tax for online shopping and purchasing goods from online shops, says the budget documents.

Online shopping received a 5 per cent VAT imposition in the previous budget of MA Muhith, but was later dropped citing reasons that it was a printing mistake.

Industry insiders said last year VAT was exempted through a clearer definition, but this time though, it is included through definition in the documents.

The 7.5 per cent VAT is too much for this emerging e-commerce sector, said Asif Ahnaf, founder director of e-Commerce Association of Bangladesh (e-CAB).

"I think online sales should not be included in Virtual Business and there should be a VAT exemption in this sector until 2024," he said.

AKM Fahim Mashroor, founder of ajkerdeal.com, one of the leading local e-commerce ventures, said this move will go against the digitisation of the country.

Currently there are about one thousand e-commerce shops in the country and annual turnover is about Tk 2,000 crore. Numbers are growing every day.