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ICT industry leaders disappointed with VAT on internet services

  • Published at 11:54 pm June 20th, 2018
Photo: Mahmud Hosasain Opu

'The imposition of the VAT conflicts with the government plan for a Digital Bangladesh'

The government’s move to levy 21.75% VAT on internet-based services conflicts with its vision for a Digital Bangladesh and would hamper the ability of such companies to generate revenue, ICT industry leaders said on Wednesday.

The comments were made by leaders of ICT industry associations AMTOB, BACCO, BASIS, Bangladesh Computer Samity, Bangladesh Mobile Phone Importers Association, e-Cab and ISPAB at a press conference at the Pan Pacific Sonargaon Hotel on Wednesday.

“A user would pay around Tk22 in VAT to use an internet-pack worth Tk100, which we think is extreme,” TIM Nurul Kabir, secretary general of the Association of Mobile Telecom Operators of Bangladesh (AMTOB), said.

Kabir said internet based industries would be able to deposit Tk1,100 crore into the government revenue net with VAT, whereas they would be able to generate Tk5,000 crore by creating internet-based employment if the government exempted VAT.

Other speakers at the press conference said they had urged the government to exempt internet-based services from VAT, tariffs and surcharges in advance of the proposed budget for the next financial year, which was unveiled earlier this month.

“If the government does not withdraw the VAT on internet, the growing e-commerce and software businesses will not be able to achieve their goals,” Internet Service Providers Association of Bangladesh (ISPAB) President MA Hakim said.

“The imposition of the VAT conflicts with the government plan for a Digital Bangladesh.”

Furthermore, Bangladesh Association of Software and Information Services (BASIS) President Syed Almas Kabir criticized the government decision to cut duties on all imported software to 5% from the existing 25%, saying it would “hamper local manufacturers”.

He added that, during the pre-budget discussions, BASIS had demanded the duty on imported software be reduced for only a few specific types of essential software, such as operating systems and cyber security software.

Bangladesh Mobile Phone Importers Association of Bangladesh (BMPIA) President Ruhul Alam Al Mahbub criticized the government’s move to impose a 15% VAT on mobile assembling plants - after having promoted the building of such plants.

“We have already invested hundreds of crore of Taka in assembling plants, and now the government decides to impose a VAT there. This is injustice,” he said.

The association leaders also said the 5% VAT on ridesharing services would come too soon, as the industry is yet to develop fully.

They added that they would sit with the government to reiterate their demands in the near future.

Bangladesh Computer Samity director AU Khan Jewel, e-Cab representative Nasima Akhter, and BACCO Joint Secretary General Mohammad Aminul Haque were also present at the press conference.