Telecom taxation contradicts Smart Bangladesh vision: Telecom operators

The taxation policy for the telecommunication sector contradicts the government's Smart Bangladesh Vision as the country, already at a global top spot in taxing mobile consumers and operator companies, has further raised taxes, say mobile operators.

They say the National Board of Revenue, after the budget proposal on 6 June, implemented a 20% supplementary duty (SD) on mobile usage, up from 15%, alongside a Tk300 SIM tax, up from Tk200.

Those, alongside the tax hikes for some associated services, will hurt mobile service usage, penetration, as well as economic development, said the Association of Mobile Telecom Operators of Bangladesh (AMTOB) at a press conference at its office in the capital today (12 June).

Comparing factors with peer countries, the association members urged the government to slash the tax burden on mobile usage as it has reached too high in Bangladesh, where per-consumer usage and penetration need much improvement.

Due to the additional tax imposition, customers will have to pay Tk139 to avail mobile services worth Tk100, making it the highest in South Asia, they added.

"After the budget proposal, the effective total tax on mobile users' recharge surged to 39% from 33.25%, which is now only next to that in Turkey, where an exceptional surcharge for earthquake recovery is applicable," said Robi Axiata Chief Corporate and Regulatory Officer Mohammed Shahedul Alam at the press conference.

The rate is 6%-13% in countries like Malaysia, Thailand, Nigeria, Singapore, Indonesia, the Philippines, Cambodia, 18% in India, 26.3% in Nepal, and 34.5% in Pakistan, he added.

Banglalink's Chief Corporate and Regulatory Affairs Officer Taimur Rahman said amid high inflation and package regulations, the telecom industry saw a decline in telecom services usage in the past two consecutive quarters, and the added taxes would increase burdens on the consumers, potentially threatening further de-growth of the industry.

"We urge policymakers to consider the broader economic implications of these taxes as penetration and usage increase is a must for a Smart Bangladesh," he added.

Robi's Shahedul Alam said around 42% of people are still without mobile telecom services in the country, while per-user monthly internet data usage here is only 6.5 GB, compared to 27-29 GB in India.

He said the telecom industry, in need of continuous investments, spends around 20% of its revenue on capacity enhancement and modernisation, and the devaluation of the taka has already significantly inflated the industry's foreign currency bills for capital expenditure.

The overall impact of the increasing taxes every year is threatening their long-term strength to serve and grow, he added.

By increasing the SD, the government might collect an additional Tk1,500 crore revenue but it risks the growth and national vision, speakers said, adding that the revenue growth can be achieved by increasing data usage instead of raising levies.

Grameenphone's Chief Corporate Affairs Officer, Hans Martin Henrichsen, stressed the need for an investment-friendly policy regime for the telecom sector.

Echoing him, AMTOB Secretary General Mohammad Zulfikar said that in a de-growth cycle, investors tend to be fearful of investing in a sector.

He concluded that the budget would trigger a decline in mobile services usage and industry revenue, leading to a slowdown in subscriber growth, digital adoption, and hindrance to mobile operators' innovation, adoption of new technology, and sustainability.