It is heartening to see the National Board of Revenue take the criticism of its recently announced value added tax (VAT) scheme to heart, as it has now revised the scheme to be much more lenient on both consumers and providers of service and goods alike. However, what is especially laudatory is the NBR’s rolling back on its internet and mobile service duties, which, in their initial form, would have proven disastrous for the country on many fronts.
In the initially announced VAT scheme, the ordinance had raised VAT rates under service codes S012.10 and S012.14 to 23% for telephone services and 10% for internet service providers (ISP), an expense which telecommunications and broadband service companies would have had passed on to their customers. While a 3% increase in mobile service duties may not sound much, ISPs in Bangladesh have had to pay a 0% duty which has led to the fast penetration of home networks in Bangladesh over a relatively short period of time.
According to the Bangladesh Association of Software and Information Services, this would have genuinely impacted Bangladesh’s formidable freelancer community who are given outsourced work from foreign companies. As things stand, over 300,000 young professionals -- 20% being women -- are engaged in the IT sector, alongside the more than 600,000 freelancers who heavily rely on internet services for their work.
If anything, there is perhaps an argument to be made that the cost of internet and mobile services should be lowered, if anything, especially considering that the average speed of the internet has remained largely stagnant for years now. Indeed, as more and more of our professional lives start shifting to the internet, Bangladesh will need its digital services to be better, faster, and cheaper above all.
