BASIS calls for reconsideration of VAT hike to foster ICT sector growth

Bangladesh Association of Software and Information Services (BASIS), the national trade organisation representing the country's IT sector, has urged the government to reconsider the increased VAT rates introduced in the Value Added Tax and Supplementary Duty (Amendment) Ordinance, 2025. 

BASIS contends that the hike in VAT on internet and telephone services will hinder the growth of the ICT sector, reads a press release. 

In a letter to the chairman of the National Board of Revenue (NBR), Md Abdur Rahman Khan FCMA, BASIS highlighted the increased VAT rates for service codes S012.10 and S012.14. 

Telephone services now face a VAT rate of 23%, while internet services are subject to 10%. BASIS expressed concerns that such increases are counterproductive to building a technology-driven Bangladesh. 

Currently, over 300,000 young professionals, including 20% women, are employed in the ICT sector. Additionally, more than 600,000 freelancers rely heavily on internet services for their livelihoods. 

The VAT increase is expected to adversely affect their operations and sustainability.
BASIS also warned that the revised VAT rates would negatively impact key sectors like e-commerce, f-commerce, and mobile financial services, all of which are critical to the country's digital economy.

Moreover, the association pointed out a significant challenge for small IT companies: the ordinance mandates VAT registration for businesses with an annual turnover exceeding BDT 500,000, replacing the previous threshold of BDT 30 million. BASIS argued that this decision poses an undue burden on small and medium enterprises (SMEs).

In light of these issues, BASIS has called on the government to reverse the VAT increases on internet and telephone services and reinstate the higher turnover threshold for VAT registration. 

Such measures, they believe, are crucial for fostering the growth of the ICT sector and achieving the vision of a technology-driven Bangladesh.