The parliamentary Development and Technology Committee has ordered the government to impose the tax on Facebook and Twitter advertisement.
The Ministry of Information, Communication and Technology, and the Ministry of Finance has been directed to impose the tax on such transactions.
As the Nepali people are immensely using social media for promotion, publicity and advertisement of any kinds of events, business and products the instruction comes in the wake. The government is unsuccessful in tracking publication by Nepali businesses or nationals placed on social networking sites which are mostly carried out informally, but it has been imposing the tax in private transaction.
The directive issued by the committee says advertisements on Facebook, Twitter, and other social media be brought under the jurisdiction of the tax system as their market is expanding every day.
Since payments in foreign currencies are restricted by the Nepal Rastra Bank (NRB), advertisers have been circumventing the regulatory body and the government to make payment and place their advertisements on social networking sites. Many ads for Nepali products and services can be seen on social networking sites.
Payments for such services are made illegally, draining a considerable amount of foreign currency out of the country. Even politicians are found to be boosting their social media pages or posts by making payments to such sites through open channel reports My Republica.
According to our reliable source, most of the payments are made through Hundi. There is no official or actual data on the volume of advertisements produced by Nepali businesses or advertisers in such global social networking sites.
The decision taken by the committee reads since the massive amount of money is flying out of the country for advertisement on social media like Facebook, Twitter and among others. The committee ordered the government to regulate such advertising and bring it under the tax net.
As estimated by the Advertising Association of Nepal (AAN), the umbrella body of Nepali advertising industry, the annual turnover of Nepali advertising industry to be worth around Rs 6 billion
It is also found that few of the organizations and individuals are using informal channels to foot their advertising bills, lack of legal payment option is the main reason behind such kinds of activities.
The culture of advertising in social networking sites are burgeoning immensely, regulating and bringing them under the tax net would not only help boost the government revenue but also make it easier for those who want promotion and publicity on those sites.
Online Khabar Writes, the Committee also directed the Ministry of Communications to submit a report within next 15 days about improvements in Nepal Telecom’s services including 4D coverage and optical fiber network.