Budget contradicts government’s digital vision: AMTOB

Highlights:

• Despite being at the bottom in terms of average revenue per user, Bangladesh stands in second place for taxes and charges on telecom operators
• 51-56 percent of the industry's revenue goes to the government exchequer even though telecom services are not naturally harmful, like tobacco
• The government should rethink the further hike in supplementary duty in consecutive fiscal years
• The proposed hike in pre-deposit for VAT appeals to hurt companies more amid slow progress in legal procedures and a lack of an effective refund mechanism
• The ongoing off-principle tax treatments contradict the government's digital vision 

The government is increasingly taxing the country's telecom operators regardless of whether it hurts both customers and the industry.

The tax hike in the proposed budget is contradictory to the government's digital Bangladesh vision, said telecom operators. 

The industry – serving as the backbone of the country's digitalisation and progress – is being forced to pay corporate taxes as high as the health-hazardous tobacco industry pays. Additionally, the tax treatment is more discriminatory when the government collects the minimum tax on annual turnover, regardless of how it might impact firms.

The Association of Mobile Telecom Operators of Bangladesh (AMTOB), in its post-budget reaction, has requested the government reconsider its proposal to hike the supplementary duty on services by their member companies.

Supplementary duties on all services rendered through SIM cards has been increased from 10 to 15 percent. It was five percent just two years ago.

AMTOB General Secretary, retired brigadier general SM Farhad, in a presentation during an online press conference, on Tuesday, said more than 50 percent of the industry's revenue goes to the government exchequer and the country is at one of the top spots in the world in charging telecom operators in the form of taxes, duties and fees.

Citing GSMA Intelligence data, he said the Bangladesh market is at the bottom of the table – which shows how much revenue the telecom industry receives from each user on average.

Here, a telecom user spends a small amount of Tk140 per month, which is lower than in India, Myanmar, Sri Lanka and even Afghanistan, while none of the countries taxes the operators so high.

Farhad also said the most-recent hike on supplementary duty increased the portion of telecom operators' gross revenue going to the exchequer from 27.5 percent to 33.25 percent in voice call and all value-added services. In the case of data or internet services, the rate is increased from 16.5 percent to 21.75 percent.

It is hurting the telecom users, including small businesses, emergency services, internet-based professions and activities.

In Bangladesh, 96 percent of the internet users are mobile-based, said AMTOB.

Citing the World Economic forum's findings, Mohammed Shahedul Alam, Robi Axiata's corporate and regulatory affairs head, said over five lakh active freelancers have already made Bangladeshis the second-largest online labour force after India. Costs for internet services are hurting them too.

The tax treatment to the mobile telecom industry is contradictory to the government's vision for digital Bangladesh, he said at the press conference.

The telecom industry is not naturally harmful or hazardous, instead, it serves as the backbone of digital development. Hence the increasing taxes reflect a lack of principle in taxation, he said. 

Some 45 percent corporate tax for telecom operators here is the highest among local industries – only equal to tobacco companies – and also the highest among its peer countries. 

Alam mentioned that the two percent minimum turnover tax on the industry is discriminatory when the rate is one percent for tobacco companies. 

At the press conference, AMTOB also opposed the proposed 20 percent hike in the pre-payment rate in the cases of value-added Tax (VAT) appeals from the existing 10 percent in the appeal commissionerate and if not solved, again, in the appellate tribunal.

Some 50 percent of the disputed VAT figure would be stuck for years if a dispute runs up to the High Court, and companies would suffer as the process takes years to see an end, said the association.

Representatives from other AMTOB member companies speaking at the event included Grameenphone's Head of Public and Regulatory Affairs Hossain Sadat and Banglalink's Chief Corporate and Regulatory Affairs Officer Taimur Rahman.