Regulatory Alerts2023-05-08
Added
FEPD Circular Letter No. 04: Clarification of Digital Marketing and Advertisement Broadcasting under Section 56 of the Income Tax Ordinance 1984
The document establishes a 15% withholding tax rate for Digital Marketing services and a 20% rate for Advertisement Broadcasting services for remittances made to non-resident entities, effective until June 30, 2023. Digital Marketing is defined as advertising or content promotion via the internet, social media, or websites, excluding television and radio. Advertisement Broadcasting is defined as advertising transmitted via television or radio channels, excluding internet-based promotions. Any previous circulars from the National Board of Revenue offering different interpretations are declared invalid upon the issuance of this letter.
Foreign Exchange Policy Department Bangladesh Bank Head Office Dhaka. www.bb.org.bd
FEPD Circular Letter No. 04 Date: 08 May, 2023
To All Approved Dealer Banks engaged in Foreign Exchange Transactions. Head Office.
Dear Sir,
Context regarding the clarification of "Digital Marketing" and "Advertisement Broadcasting" according to Section 56 of the Income Tax Ordinance 1984.
Reference is drawn to the letter number 08.01.0000.033.22.116 dated 17/04/2023 issued by the National Board of Revenue on the subject cited above.
In the matter mentioned above, banks are deducting tax at various rates from different customers under Section 56 of the Income Tax Ordinance 1984 for remitting funds in favor of non-resident institutions. In this regard, the National Board of Revenue has clarified the terms "Digital Marketing" and "Advertisement Broadcasting" through their letter dated 17/04/2023. In this context, instructions have been given to follow the applicable tax rate for the aforementioned services until 30 June 2023. It is mentioned that the National Board of Revenue's letter states that if any letter containing different interpretations on this matter has previously been issued by the National Board of Revenue, it shall be considered invalid from the date of issuance of this letter.
Please kindly inform all concerned parties regarding this matter.
Yours faithfully,
(Signature) (Md. Sarowar Hossain) Director (FEPD) Phone: 9530123
Enclosure: As described
Government of the People's Republic of Bangladesh National Board of Revenue [Tax Policy Wing] Agargaon, Dhaka www.nbr.gov.bd
Number: 08.01.0000.033.22.116 Date: 04 Baisakh, 1430 Bangabda 17 April, 2023 AD
Subject: Clarification regarding "Digital Marketing" and "Advertisement Broadcasting" according to Section 56 of the Income Tax Ordinance. Reference: Bangladesh Bank's letter number FEPD(Remittance Policy-2)2(4)/2023-1306, Date: 09-03-2023
In response to the subject cited above, the following clarification is issued:
| Sl No | Type of Service/Payment | Description of Service/Payment | Applicable Tax Rate until 30 June 2023 |
|---|---|---|---|
| 1 | Digital Marketing | If any advertisement is promoted using the internet, i.e., if any advertisement is promoted on social media or a website, or if any content is promoted or marketed, it shall be considered Digital Marketing. Any content or advertisement broadcast on any television or radio channel shall not be considered Digital Marketing. | 15% |
| 2 | Advertisement Broadcasting | If any advertisement is broadcast on any television or radio channel, it shall be considered Advertisement Broadcasting. If any advertisement is promoted using the internet, i.e., if any advertisement is promoted on social media or a website, or if any content is promoted or marketed, it shall not be considered Advertisement Broadcasting. | 20% |
- If any letter containing different interpretations on this matter has previously been issued by the National Board of Revenue, it shall be considered invalid from the date of issuance of this letter.
(Signature) (Bapan Chandra Das) Second Secretary (Tax-11) Tax Policy Wing National Board of Revenue
A.K.M. Romijul Islam Additional Director Foreign Exchange Policy Department, Remittance Policy Branch-2 Bangladesh Bank