VAT on online purchase must if not paid by cos during sourcing: NBR
Value-added tax on online purchase of goods and services will be applicable if the e-commerce company concerned collects those from the original suppliers and manufacturers without paying VAT, according to the National Board of Revenue.
‘There will be no VAT on online purchase of any goods and services if the e-commerce platforms pay the VAT while collecting those from original producers and suppliers,’ VAT wing of the revenue board said on Sunday.
VAT at the rate of 5 per cent, however, will be applicable to commission, service charge and fees it receives from manufacturers of goods and suppliers of services, it said in a directive on collection of VAT from online sales sector.
The revenue board in the budget imposed 5 per cent VAT on online sales or e-commerce services.
According to the clarification, e-commerce platforms operate their activities as sales channel as they do not have any physical sales centre.
The platforms purchase or collect the goods and services from the manufacturers or service providers and then sell those to final consumers.
In exchange, the e-commerce company gets an amount in forms of commission, fee, service charge, revenue sharing or any other forms from the manufacturers or suppliers of goods and services.
In practice, e-commerce platforms also charge consumers in various forms like service charge and delivery charge.
VAT is a consumption tax and final liability of VAT goes to consumers, the NBR said.
So, consumers will not have to pay VAT on the total price of a products or service if the online sales company collects the products or services after payment of VAT, it said, adding that the second time VAT collection from consumers would cause double taxation on same prices.
The e-commerce platforms, however, will have to preserve the VAT challan or treasury challan as a proof of payment of VAT while collecting the goods and services, according to the NBR directive.
The NBR will not accept the claims of VAT payment without such documents, officials said.
They said that an e-commerce company would collect VAT on total receipts, including the price of the product or services and online service charge from consumers if the company collected the goods and services without payment of VAT.
The directive also said that 5 per cent VAT on commission or service charge would be applicable to sales of goods and services without consideration of whether the goods and services were VAT exempted or not.
For example, the essential commodities like rice, pulse, vegetables, fish and meat are VAT exempted goods but 5 per cent VAT will be applicable to commission or service charge the online platforms receive for selling the items online, it said.
Bangladesh Association of Software and Information Services director AKM Fahim Mashroor told New Age on Sunday that the large-scale manufacturers or suppliers usually provided VAT challan while unorganised or small entrepreneurs did not have the facility to issue VAT challan.
So, many products which mainly to be collected from unorganised or small entrepreneurs will come under the VAT net and will increase the burden on the consumers, he said.
Fahim, also chief executive officer of Ajkerdeal.com, an online marketplace, termed the directive as a good initiative as it would impose 5 per cent VAT only on commission or service charges, whatever in name, as previously the VAT fell, in many cases, on total prices.