In view of the all-encompassing role played by the telecom industry in Bangladesh’s development, the Association of Mobile Telecom Operators of Bangladesh (AMTOB) on Tuesday said that none of the industry's recommendations were addressed in last year's proposed budget for fiscal year 2021-22.
During a virtual post-budget reaction, they urged the government to reconsider the recommendations for the betterment of the industry.
Before the budget, AMTOB had laid out a seven-point recommendation to help develop the telecom industry, including withdrawal or rationalization of the minimum 2% turnover tax imposed on the unprofitable carriers, rationalize of the current high corporate tax rate and reduce to a tolerable level on non-listed and listed operators to 32.5% and 25% respectively (current 40% for listed and 45% for non-listed).
Other points included withdrawal of the supplementary duty and surcharge from direct operator billing, providing amortization facilities on all intangible assets, abolish Tk200 SIM tax, reducing the existing 33.25% and 21.75% VAT, SD, and surcharge over Tk100 talk time and internet usage respectively, providing clear guidelines for VAT exemption for government agencies and rationalize interest on unpaid VAT.
Elaborating on the predicaments faced by the telecom industry, AMTOB Secretary General Brig Gen SM Farhad (retd) said that while the mobile market revenue accounted for 1.1% of the country’s GDP in 2019, the sector’s tax and fee payments accounted for around 4.4% of total government tax revenue.
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Despite expansion of mobile coverage, about half of Bangladesh’s population (46% unique-subscriber penetration) remains unconnected to the mobile network. According to the International Telecommunication Union (ITU), 10% increase in mobile broadband penetration would yield 2.43% increase in GDP per capita in developing countries. Therefore, the government can easily boost GDP growth by lowering the taxation structure, he added.
Taimur Rahman, chief corporate and regulatory affairs officer of Banglalink, said: "We are disappointed to see that our reasonable demand for a few revisions has not been addressed in the proposed budget. It would have been beneficial to mobile phone subscribers if some of our requests had been taken into consideration.
If these tax rates are reduced significantly, our investors will feel more encouraged to invest in this telecom market, which is a good sign from the FDI perspective as well. We are still hopeful that the authorities will make a taxation regime which is conducive to providing quality digital services to customers at affordable prices."
Hossain Sadat, director and head of public and regulatory affairs at Grameenphone, said that the telecom sector was declared an emergency sector during Covid-19 and was contributing significantly in terms of connecting people to what matters most.
"We are being considered as an important vehicle to speed up the digitization journey. We are continuously expanding our footprint and connecting the unconnected citizens. We believe rationalizing the taxation systems will accelerate the digital journey as well as will help us to contribute more towards the national exchequer,” he also said.
Shahed Alam, chief corporate and regulatory officer of Robi Axiata, said: “Despite making our demands based on thorough analysis, we, as an industry, are continuing to get deprived from the budget every year. In this backdrop, we would urge the government to undertake a comprehensive study on the taxation structure for the industry, so that we can have a healthy dialogue and arrive at decisions that will truly unlock the digital potential of the country.”
