Bangladesh has the highest rate of ICT taxation among 125 countries, holding back its ICT development, said a study.
The study by Miller and Atkinson under the auspices of International Technology Information Foundation (ITIF) shows that China imposes the lowest taxation of 3% while Bangladesh slaps 58%, which is the highest taxation on the primary basket of ICT goods and services used in the study.
The second-highest taxation is in Turkey, imposing 26%, followed by Congo, Brazil, Sri Lanka, Pakistan, Nigeria and Kenya.
The survey consists of taxes and customs duties on basic mobile phones, smart phones, computers and other digital cameras and audio services.
ICT taxation in 40 of the countries are low, ranging between 3%-5%, while the rest impose 5%-20% tax.
Policy Research Institute (PRI) Vice-Chairman Sadiq Ahmed highlighted the study report in his presentation paper at a seminar on Strengthening the ICT Revolution in Bangladesh held at a city hotel yesterday.
Analyzing the study report, he said the Miller and Atkinson study looked at price elasticities of ICT demand and concluded that this elasticity is quite high for Bangladesh.
These taxes are a major reason for the low use of ICT services in Bangladesh compared to other countries, according to the study report.
Using alternative price elasticity assumptions of demand, the study concluded that the negative effects of high ICT taxation is reducing the demand for ICT services.
“This is a very worrisome finding and raises serious concerns about the government priority given to the spread of the ICT revolution,” Sadiq Ahmed said.
He added that the high taxation issue has now come to the fore, and foreign investors are reluctant to further invest in new mobile networks or acquire additional radio spectrum in Bangladesh in view of the low profitability.
The presentation paper suggested that a special challenge will be to further increase the mobile tele-density and to expand internet and bandwidth connectivity through investments in network infrastructure as well as to lower access cost through reductions in ICT taxes.