Boosting digital economy a far cry without tax reforms: AMTOB

Access to mobile networks is no longer a luxury for Bangladesh, as the pandemic has proved that it is now as essential as food and clothing in the people's day-to-day lives. But the government did not grant this sector any support in the proposed budget for Fiscal Year 2021-22.

Leaders of the Association of Mobile Telecom Operators of Bangladesh (AMTOB) made the remark at a virtual post-budget press briefing on Tuesday, adding that the proposed budget did not even address any of the industry's recommendations.

Urging the government to reconsider the recommendations they had previously placed, AMTOB leaders said the continuation of unsustainable taxation will jeopardise the digital economy.

"Without tax reforms, the digital economy we are all aspiring for will not be achieved," AMTOB Secretary General Brig Gen SM Farhad (Retd) said at the event while delivering a presentation.

The mobile operators had previously demanded withdrawal of 2% minimum turnover tax, reduction of corporate tax to general rate (40% to 25% for listed and 45% to 32.5% for non-listed), elimination of SIM tax, and reduction of consumer taxation.

The AMTOB secretary general said, "Despite the expansion of mobile coverage, about half of Bangladesh's population (46% unique-subscriber penetration) remains unconnected to the mobile network. Reforming mobile taxation is therefore the key to accelerating digital inclusion.

"Mobile operators believe that reducing the SIM Tax is one of the enablers to reach the 46% unconnected population. If Tk200 is eliminated from SIM Tax, around 22,100 Jobs will be made along with adding $485 million investment in the sector annually."

To ensure sustainability of the mobile sector and to drive the next phase of digital inclusion, AMTOB called on the government to consider six recommendations – including withdrawal or rationalisation of Minimum Corporate Tax to general rate, reduction of Corporate tax and align with general rate, eliminating the SIM tax of TK200 and rationalising supplementary duty on mobile usage.

Speaking at the press meet, Chief Corporate & Regulatory Affairs Officer of Banglalink Taimur Rahman said, "It would have been beneficial to mobile phone subscribers if some of our requests had been taken into consideration.

"If these tax rates are reduced significantly, our investors will feel more encouraged to invest in this telecom market, which is a good sign from the FDI perspective as well. Operators are still hopeful that the authorities will make a taxation regime which is conducive to providing quality digital services to customers at affordable prices."

Director and Head of Public & Regulatory Affairs at Grameenphone Hossain Sadat said, "Besides, we are being considered as an important vehicle to speed up the digitisation journey. We believe that rationalising the taxation systems will accelerate the digital journey as well as will help us to contribute more towards the national exchequer."

Chief Corporate and Regulatory Officer at Robi Axiata Ltd Shahed Alam said, "Despite making our demands based on thorough analysis, we, as an industry, are continuing to get deprived from the budget every year.

"In this backdrop, we would urge the Government to undertake a comprehensive study on the taxation structure for the industry, so that we can have a healthy dialogue and arrive at decisions that will truly unlock the Digital potential of the country."