Bangladesh caps VAT on Facebook, Youtube ads

Bangladesh has imposed value added tax (VAT) on digital advertisement, including those put on social networking sites Facebook and Youtube.

Bangladesh Bank issued a circular yesterday notifying the imposition of 15 per cent VAT, effective immediately and to be taxed from the source.

The circular has been forwarded to all the banks, instructing to deduce the amount during transaction in all the social media networks and digital interface.

Taxing digital advertisement was an issue that the National Board of Revenue proposed last year due to rising popularity of online advertisements.

Bangladesh government included the idea of imposing VAT on online advertisements in its last budget for the fiscal 2018-19.

Market sources say companies in Bangladesh are spending nearly Tk 1,000 crore every year on digital marketing, which was annually witnessing a triple-digit growth.

People are progressively gathering on social media while increasing sophistication of algorithms means the ads can be accurately targeted to customers.