Mobile handset importers urged the government to withdraw the proposed value added tax and duties on the imported handsets.
They said the proposed tax could reduce the affordability of the lower income people and encourage smuggling as the country completely depends on import for the product.
“Proposed taxes will give a rise to smuggling. Lower income consumers will also be affected. So the taxes should be withdrawn and kept as it is now, or set in inconsistent with that of the ICT sector,” said Mustafa Rafiqul Islam, President of Bangladesh Mobile Phone Importers Association (BMPIA).
Mustafa was speaking at a post-budget press conference in the city yesterday, organised by BMPIA.
He also said as the government aims to build a “digital Bangladesh,” such tax hike on mobile import will not be consistent with that goal.
“Currently, around 60-70% imported handsets are feature phones. As the minimum price is within Tk1,000 each, lower income people usually buy such phones. But tax hike will increase the price to Tk1,100-1,200,” claimed BMPIA president.
The import of mobile handsets has increased manifolds over the last one decade.
While it was 6.22 lakh in FY2004-05, the figure has risen to 2.01 crore in FY2013-14 since the government gradually rationalised duties, BMPIA said.
Illegal entry of handsets has also declined remarkably over the period.
The data showed 95% of the handsets were imported illegally in 2001-02, which have reduced to only 4% in the FY14.
The “rationalisation of duties” also reduced the minimum price of a handset to Tk850 from Tk2,500 in last six years, the association said.
“In such a situation, if taxes are hiked, there will be a negative impact on the market. So it should be kept as now, or set in line with the ICT sector, or a specific duty of Tk100 can be imposed on a handset import,” Mustafa suggested.
In the proposed budget, Finance Minister AMA Muhith raised Vat to 15% from the present 10%.
BPMIA said 15% Vat is accompanied by 10% customs duty and 5% source tax, making the total rate 30% which is only 7.2% in India.
About the Vat raising, Muhith said the local assemblers have to pay 15% while the importers pay 10%, which creates an uneven competition between them.
The importers should also pay 15% Vat like as the assemblers do, he argued.
But market insiders said there is no local assembler of mobile handsets in the country though some companies are working to start such ventures which will, however, take time.
“Assembling of mobile devices is a complex task. Besides, the country is yet to have an appropriate environment for launching handset assembling plants. The efforts will take time,” said BMPIA General Secretary Rezwanul Hoque.
Some companies in Bangladesh customise handsets, or work in researching or designing products, but the products are made in China, added Rezwanul who is also director at Symphony.
He argued: “In Bangladesh, 80% of the people use handsets with prices below Tk2,000. Under the proposed tax structure, the importers will have to pay Tk21 as tax for Tk100 price. It will make the handsets beyond the affordability of most people.”
While contacted, cellular division head of local brand Walton SM Rezwan Alam said there will be no uneven competition in the present structure of duty as there is no assembler in the country.
Association of Mobile Telecom Operators of Bangladesh Secretary General TIM Nurul Kabir and Federation of Bangladesh Chambers of Commerce and Industry Director Shafqat Haider, among others, also spoke on the occasion.