The embryonic e-commerce sector in Bangladesh, contributing less than 2% of the nation’s GDP, holds vast growth potential. With the upcoming National Budget FY 2025-26 fast approaching, the e-commerce industry must plant its seeds and address respective concerns to establish a favourable regulatory environment.
Even though the Marketplace model, an essential business modality of e-commerce, has been recognized in the VAT regulations in 2023, challenges still remain in its practical implementation. Hence, it is high time that the Marketplace definition is duly complemented with an explanation letter exempting it from the obligation to hold VAT receipts—a responsibility that more appropriately falls on individual sellers. This differentiation is imperative as it will remove any grey area and relieve marketplaces from a complex regulatory burden.
Daraz Bangladesh, the standard-bearer of Bangladesh’s e-commerce sector, has been growing with a Compound Annual Growth Rate (CAGR) of 28% from 2018–2024, with more than 50,000 registered sellers and 8 million monthly active users. The numbers paint a picture of the industry’s potential to grow, but beneath the numbers lie Daraz’s continued struggle to establish itself as a household name in the country, even after investments from Alibaba and access to its cutting-edge tech-infrastructure. On a similar line, many other companies and SMEs, have struggled to survive, let alone grow. This highlights the pressing need for a more supportive regulatory framework that enables sustainability in the e-commerce space.
The importance of e-commerce has become evident during the COVID-19 pandemic, and continues to grow, particularly in light of the growing tech-savviness of customers and the shift towards the convenience of digital commerce. However, this potential must be nurtured with accommodating tax policies. The current 10% TDS on commissions—even for loss-making companies—hampers cash flow, the lifeline for startups. Most e-commerce companies are start-ups that are not yet profitable and rely on investments for growth. Removing this TDS burden, particularly when these companies already pay a minimum turnover tax, would have minimal impact on NBR’s collections. For instance, Daraz Bangladesh Limited, the highest taxpayer in the industry, paid BDT 220 million in taxes in FY 2023–24, a fraction of NBR’s BDT 3 trillion total.
The global e-commerce industry is projected to reach a market size of 6 Trillion USD by 2029 with a CAGR of 8.02%. If Bangladesh is to be part of this e-commerce revolution, NBR should provide the sector with a sandbox of favourable policies. This would bring in foreign investments from global players like Amazon, Walmart and with a friendly regulatory environment, the startups operating today can become the unicorn company of tomorrow, contributing a lion’s share to NBR’s revenue.
