Telecom operators demand withdrawing 2% turnover tax

Also wants waiver on SIM card tax

The Association of Mobile Telecom Operators of Bangladesh (Amtob) wants the government to withdraw the provision of 2% turnover-tax on its member operators.

According to the organization, the provision contradicts the income tax principles, as taxes are collected on profit of an organization and not on turnover, for it results in capital erosion in paying turnover taxes despite incurring loss.

The association also wants the National Revenue Board (NBR) to abolish the provision of slapping Tk200 in taxes on each SIM card, to make telecom services accessible and affordable, especially for the people in the rural areas who are yet to get connected.

Despite rapid increase in subscribers, almost half of the country’s population is yet to get connected with mobile phone networks, Brig Gen SM Farhad (retd), secretary general of Amtob said.

He said this during a pre-budget discussion with NBR held earlier this year and urged the withdrawal of 2% tax on turnover on the telecom operators of the country.

Farhad also pointed out that in the last few years, the revenue of the telecom sector was 1% of the country’s total gross domestic products (GDP) and the sector’s tax payments contributed to 4% of the NBR’s total revenue collections

So, the contribution of the sector to tax-revenue is four times greater than its size, with the sector’s overall contribution to GDP is 7%. To expedite further GDP growth from the sector the government needs to reduce taxes through tax reforms to ensure digital inclusion, Farhad also said.

Mobile airtime has to pay 33.25% duty, which is of prepaid nature. Therefore, customers who purchase various digital non-telecom services using a prepaid airtime balance have to pay an additional 16% (SD 15% and SC1%).

VAT law allows only 15% VAT adjustment.

According to the association, if the proposals are implemented the mobile phone subscribers of the country will benefit and investors would also feel encouraged to make further investments based on the reduced tax rates.

Amtob also proposed to the NBR for reducing corporate taxes from both listed and non-listed telecom operators.

Corporate tax on the listed telecom operators should be reduced to 25 % from 40% and on the non-listed companies to 32 % from 45%, the association suggested.

It also argued that the applicable taxes from the telecom should be reduced to a rational level as the telecom sector contributes to local and international trade, education and services.

Additionally, Amtob urged NBR to make the country’s agreements on double taxation with 33 other countries functional by implementing the Dual Taxation Avoidance Agreement (DTAA) and rationalize non-residents under section 57.

Despite the country’s agreements with the countries, the people who do not have any office in the country are required to take a non-deduction certificate from NBR.

Under clause 56 of the income tax act, the taxpayers have to pay taxes at the rate of 30% and the rate is significantly high, said Amtob.

Referring to the VAT exemption on 2G and 3G services according to a notification from the BTRC, Farhad sought a similar facility for 4G services.

He also pointed out that under the Income Tax Act of Bangladesh, payments made for the purpose of Corporate Social Responsibility (CSR) are not considered as allowable expenditure.

However, there is a list of 22 areas where taxpayers are eligible for a 10 % discount on CSR activities, and Amtob requested to include the relevant section for considering this expenditure as allowable expenditure.