Will poorly developed Bangladesh introduce e-commerce taxation?

E-commerce is one of a few industries that continue to grow and develop despite the current tough economic situation in the world. Progress of e-commerce comes everywhere regardless geographical position, government and the state of economy. Bangladesh is the seventh most populous country in the world and is among the most densely populated countries in the world with a high poverty rate. However here people know pretty well what the e-commerce is. A known Internet resource IBLS has covered the current situation on Bangladeshi e-commerce market. Accrediting to its report Bangladesh enjoys an annual economic growth rate of approximately 50% per annum. Yet in spite of this impressive rate of growth, Bangladesh has been unable to reap the benefits of E-commerce as the penetration of PC usage among its citizenry remains low. Additionally, Internet usage is sporadic among the domestic population. Yet Bangladesh is determined to transition to a more modern electronically based economy and is engaged in developing the necessary infrastructure. Passage of the Information Technology (Electronic Transaction) Act in 2002 was a first in that direction.

Bangladesh is building a solid legal framework to facilitate E-commerce, thus eliminating the need for paper documents in many business deals. The enacted Electronic Transition Act recognizes that electronic commerce was being retarded for want of a legal framework that recognizes digital signatures and other electronic documents necessary for the flow of E-commerce. The Act also has adequate provisions to encompass cyber crimes which are not covered by any existing law. 

It also aims to eliminate barriers to E-Commerce, promote legal and business infrastructures to implement secure E-transactions, curtail the need for paper documents and signatures, and facilitate electronic filing in government agencies, ensuring efficient delivery of electronic records from government offices.
 
What measures has Bangladesh taken to develop and reap the benefits of E-commerce?
Bangladesh has declared “Data Processing and Software Export” a Thrust Sector both in its Industrial and Export policies and has provided a unique package of incentives so that the private sector can play a major role in this economic sphere. Bangladesh is also encouraging private sector involvement by allowing tax deductions for investments made in making themselves E-commerce ready.

Additionally, Bangladesh has instituted an IT Policy, drafted with a view to making Bangladesh an IT-driven nation by the year 2010. An IPR (Intellectual Property Right) Act has been introduced to encourage IT development by allowing innovators and inventors to protect their investments. 

Finally, Bangladesh has taken the initial steps in providing a technical and physical backbone for IT. Bangladesh now has an optical fiber network which runs over 300 Rail Stations all over the country. These will be connected immediately with the submarine global optical fiber backbone and at least 300 Railway Station spots spread all over the country will come online, joining Bangladesh with the global system of high speed transmission and reception capacity.
 
What financial incentives are being offered to businesses wishing to engage in E-commerce?
Some of the incentives include: Relaxed term loans from banks and other financial institutions to set up IT-related business, 100% percent foreign owned investments and joint ventures are being encouraged by allowing a tax exemption and repatriation of capital and profit. Additionally, VSAT (Very Small Aperture Terminal) is now open to the private sector.
 
How will passage of the Electronic Transition Act define taxation of E-commerce in Bangladesh?
Following the model of the EC and other legislative bodies, Bangladesh has sought to codify and define the various aspects of E-commerce transactions. These definitions allow the government to determine its jurisdiction over such transactions as well as define which transactions are to remain exempt and which transactions are taxable under existing taxation rules.

These are all necessary first steps before the implementation of any cohesive tax policy, concludes IBLS.