The mobile phone operators’ demand for complete removal of SIM tax is not logical, said Post and Telecommunication Secretary Abu Bakar Siddique.
“SIM tax was reduced half previously, now the operators want it be eliminated completely. It’s not a rational demand at all,” he said.
In the current fiscal year, the government reduced tax on the purchase a SIM to Tk300 from Tk600.
The telecom operators have demanded reducing tax to zero in the upcoming fiscal year as they have to “pay it from their own pockets.”
“Mobile operators pay the tax (on behalf of subscribers). If it is withdrawn, we can contribute more to the national exchequer,” said TIM Nurul Kabir, secretary general of Association of Mobile Telecom Operators of Bangladesh (AMTOB).
But the secretary said the mobile operators only look at their benefits and never think of how the government would collect its expected revenue.
He suggested the tax should continue for more one or two years as there was a 50% reduction in the current fiscal year.
“After 1-2 years, we will consider if the tax should be in effect or not, but not now.
Former finance adviser of a caretaker government AB Mirza Azizul Islam suggested following international standard rate of tax on mobile SIM cards.
“As the VAT on SIM card could be subjected to a universal VAT structure, we should analyse the rates of other countries.”
At different meetings and press conferences recently, the telecom operators urged the National Board of Revenue (NBR) to cut Tk300 tax on SIM saying the tax is against the growth of mobile penetration.
It contradicts the government’s vision of building Digital Bangladesh, they said.
At present, the operators pay a total of Tk300 tax for a SIM card sale, which includes Tk109.96 value added tax (VAT) and Tk190.05 supplementary duty.
Industry insiders said the mobile operators have been left with no choice other than paying the tax from their fund considering the economic conditions of subscribers in Bangladesh and market competitiveness.
They claimed the SIM tax withdrawal will widen mobile connectivity and contribute to taking the penetration to more than 80% of the population by 2015.
Industry people said the government income will increase at least 20% after SIM tax is lifted.
In the FY2005-06, the government introduced Tk800 SIM tax. It was reduced to Tk600 in FY2010-11 and Tk300 in FY13-14.
During years since 2010, the industry witnessed a modest average growth of 18%.
The subscribers increased 23.6% in FY2010-11, 20% in 2011-12 and 10.9% in 2012-13. The subscribers’ growth rate was only 9% during the current fiscal year when the tax was cut by half.
