Tax regime discouraging investment in telecom: Robi
Mobile operators are currently paying 2% Minimum Turnover Tax, while the tobacco industry is paying only 1% and others 0.60%
The high tax regime in Bangladesh – which the telecom operators consider as their biggest challenge – is discouraging investment in this sector, said Robi Axiata Ltd Chief Executive Officer Mahtab Uddin Ahmed on Wednesday.
Telecoms will not be able to provide 100% 4G connectivity even in the next three years if this taxation structure remains unchanged, he said while discussing the upcoming budget and current issues in the telecom industry at a virtual event.
The Robi CEO said the sector has been witnessing a gradual decline in investments due to the existing taxation structure.
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Making a presentation, he continued, "From 2011-2015, industry average investment per year was Tk5,727 crore. But from 2016-2020, the per year investment dropped to Tk4,555 crore."
The second largest mobile operator's boss also said the mobile operators are the victims of unfair, irrational and discriminatory tax structure, despite fueling the digital economy as a platform for services such as digital payment, ride sharing, deliveries, education, health, agriculture and e-commerce.
Mobile operators are currently paying 2% Minimum Turnover Tax, while the tobacco industry is paying only 1% and others 0.60%.
"What is wrong with the mobile operators? Why do they have to pay such a high tax?" he said with a hint of disappointment in his voice.
Presenting a comparative scenario of corporate tax in some other countries, The Robi CEO said Bangladesh also imposes a higher corporate tax on telecom operators. "Corporate tax in Malaysia, Indonesia and Sri Lanka is only 24%, 25% and 28% respectively, but it is 40% in Bangladesh."
Due to this high taxation, mobile phone operators' return on investment is also decreasing gradually.
Mahtab Uddin Ahmed said Axiata & Airtel's operators in different countries are achieving higher return on investment than Bangladesh.
"In Malaysia, Celcom registered 10.27 times higher profit than Robi in 2020. At the same time, Axiata Indonesia and Sri Lanka's profit was also 2.69 and 3.20 time higher than Robi," he added.
The Robi CEO also said mobile phone operators' revenue is decreasing, and voice calls will not be able to sustain this sector in the future. Voice calls currently provide the lion's share of telecom companies' revenue.
In 2010, voice calls' contribution to Robi's total revenue was 95% and earning from data was only 5%. But in 2020, share of voice revenue dropped to 70% as earning from data has grown to 30%.
