Budget FY19: 5% VAT on e-business

In fiscal year 2015-16, a 4% VAT was proposed on the sector, which was later cancelled due to strong opposition from stakeholders.

Online shopping will be more costly from July 1, as the government has planned to impose a 5% value –added tax (VAT) on e-commerce businesses.
Reading out his budget speech in parliament on Thursday, Finance Minister AMA Muhith said: “Due to information and communication technology, digital and virtual business is replacing conventional business. In order to keep pace with these changes, we need radical reform in our tax system.”
He further said: “With the fast development of internet technology, social media and mobile application platforms, virtual-based business ]are booming.”
In order to bring these online-based virtual businesses within the tax net, a new service code has been defined as “Virtual Business”—on which 5% VAT shall be imposed,.
This is Muhith’s second proposal to impose VAT on e-commerce. Earlier on, in his budget speech for fiscal year 2015-16, he proposed a 4% VAT on the sector, which was later cancelled due to strong opposition from stakeholders.