VAT and Virtual Services: Budget Proposals Stir Digital Concerns
Economic Adviser Dr. Salehuddin Ahmed has proposed a significant hike in the Value Added Tax (VAT) on online sales commission—from the current 5 percent to 15 percent. The proposal was announced on Monday afternoon during the virtual presentation of the national budget for the fiscal year 2025–26.
Additionally, Dr. Ahmed introduced a definition for Over-the-Top (OTT) platform services and proposed a 10 percent supplementary duty on such services. However, he also noted that the tax deduction at source (TDS) on internet services would be reduced from 10 percent to 5 percent.
Entrepreneurs and digital commerce stakeholders believe these measures could increase consumer costs for online purchases and place added pressure on local OTT platforms. In an era driven by globalization and technology, online shopping has become an essential part of daily life for many consumers. The growing trend of digital purchases has contributed substantially to the development of a cashless and digital economy. For this reason, many industry insiders have described the new budget proposals as “discouraging news” for both businesses and consumers.
The interim advisory council has approved a total proposed budget of BDT 7.90 trillion (Tk 790,000 crore) for the upcoming fiscal year. Of this, the revenue budget has been set at BDT 5.74 trillion (Tk 574,000 crore). Notably, the overall budget size is BDT 70 billion (Tk 7,000 crore) smaller than that of the current fiscal year—marking the first time in Bangladesh’s history that the budget has contracted rather than expanded.
