Mobile operators seek tax parity, SIM tax cut for digital growth 

Mobile network operators yesterday requested the National Board of Revenue (NBR) to remove the Tk300 value-added tax (VAT) on SIM cards and e-SIM for the sake of better digital penetration.

In a pre-budget discussion with NBR officials, the Association of Mobile Telecom Operators of Bangladesh (Amtob) also reiterated its demand for a fair corporate tax equal to the general corporate tax in the country.

Mobile operators have to pay a 45% corporate tax which comes down to 40% for the publicly listed ones. On the other hand, the general corporate tax rate for non-listed companies is 27.5% and 20%-22.5% for the listed companies.

"We demand that the mobile operators not be categorised separately but be restructured like other general companies," Amtob said.

"Developing countries provide subsidies to enhance the information and technology sector. In contrast, mobile operators in Bangladesh are subjected to high tax rates, which hinder the growth of the ICT sector," reads their proposal.

They also requested to cut mobile operators' corporate tax by 10 percentage points for listing with stock exchanges.

If corporate tax is reduced, higher growth in the telecom industry will create opportunities for increased government revenue, the association said.

They also sought removal of the 20% supplementary duty and 1% surcharge as telecom services are not anything to be discouraged like alcohol, tobacco or luxury goods.

Purchase of non-telecom products and services with the mobile balances is subject to the 1% surcharge, which hinders the needed level playing field as the surcharge is not applicable for the payments through mobile financial services.

In cases of VAT disputes, the monthly interest is 2% on the unpaid amounts and there is no time limit. Amtob requested to make the monthly interest 1% and not charge any interest for more than 24 months.

Various government institutions and regulatory authorities often provide services that are subject to VAT. However, some of these institutions do not issue VAT invoices against such services. 

"As a result, even though the service recipients pay VAT they are unable to claim input tax credit due to the absence of the VAT invoices, which increases business costs," Amtob said.

There are Double Taxation Avoidance Agreements between Bangladesh and 40 other countries, yet all non-resident providers in Bangladesh who do not have a permanent office must obtain a non-deduction certificate from the NBR. Amtob proposed to abolish the non-deduction certificate system.

Digital contents are intangible assets that are used by businesses over years. Mobile operators proposed to include digital contents or similar capital expenditure in amortisation calculation that would help a fair accounting.