The VAT authorities have made an initiative to scrutinise major commercial banks' VAT collection from overseas payment of advertisement bills on Facebook, YouTube and other online networks.
To this end, the Large Taxpayers' Unit (LTU) under the Value Added Tax (VAT) wing recently wrote to the managing directors of 17 large commercial banks.
They have asked the banks concerned to furnish the details of VAT collection from the advertisement bills that were paid beyond the geographical boundary of Bangladesh.
As per the VAT Law 1991, banks will have to collect VAT at a rate of 15 per cent from advertising firms providing overseas ads using internet service like Facebook, YouTube and also from their royalty.
All the banks are liable to deduct VAT from overseas advertisements, the LTU letter said.
The ad firms pay service charges against overseas advertisement through Bangladesh Bank and other banks.
An LTU official said initially the unit has given the banks seven days' time to furnish information, but it may be extended upon applications of the banks.
"Based on information provided, LTU will serve demand notice on errant banks that don't deduct VAT from overseas advertisements…," he said.
Officials said only two to three banks have so far responded to the LTU's letter.
Agrani, Brac, Islami Bank, AB Bank, Dhaka Bank, Dutch-Bangla Bank, Janata Bank, Uttara Bank, Prime Bank, Pubali Bank, Sonali Bank, Standard Chartered Bank, National Bank, Premier Bank, Bank Asia, HSBC and South East Bank received the letter.
However, banking sector insiders have said it is difficult to sort out payment for advertisements on Facebook, YouTube and other internet services.
They said most of the overseas payments are made through credit cards not mentioning the mode of disbursement. Sources said most of the banks were not aware of the collection of VAT at a rate of 15 per cent from overseas advertisement bills.
Earlier, the VAT policy wing of the National Board of Revenue (NBR) sent letters to the central bank and the field-level VAT offices across the country to ensure VAT collection from overseas payment of ad bills.
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