Tech entrepreneurs want free cash-out, tax waiver on laptops, startups

Technology entrepreneurs have urged the government to take appropriate measures in the national budget for the forthcoming fiscal year 2023-24 to support the country's goal of becoming a smart nation.

In a pre-budget webinar organised by The Business Standard  on Thursday that focused on the technology sector, these entrepreneurs suggested providing a free cash-out facility, especially for merchants, to encourage the widespread use of electronic payments. 

They emphasised the need for fiscal policy support to make technology products and services accessible to the general population, especially in a high-inflation environment where additional taxes may burden consumers.

AKM Fahim Mashroor, a prominent tech entrepreneur and former president of the Bangladesh Association of Software and Information Services (BASIS), pointed out India's successful budgetary measures, where mobile financial services (MFS) cash-out transactions are free for merchants. 

This move has facilitated the transition to a cashless society, he noted, adding, "In contrast, in Bangladesh, merchants hesitate to accept MFS payments due to the approximately 1.5% fee they incur when cashing out the received amount."

Subrata Sarkar, president of Bangladesh Computer Samity (BCS), stressed the importance of conducting thorough impact assessments before imposing higher taxes and duties on essential products such as ICT hardware. 

He explained that this is necessary to prevent adverse consequences and ensure the sustained growth of the technology sector. 

Subrata mentioned that when laptops and desktops along with all other ITC hardware were getting pricier since the pandemic, the soaring dollar further fuelled the prices of the imported devices last year. 

In that very year, the government imposed a 15% value-added tax (VAT) on imported laptops and printers in the name of encouraging local production, he said, adding that now the hardware is 30%-40% pricier and is going beyond the reach of the average families when the government is planning to teach coding in primary schools.

He said the VAT had been waived since 1998 to protect local assemblers of laptops and printers, who were not yet capable of serving the local market in terms of quality and quantity, maintained the BCS president.

Fahim Mashroor said, on the other hand, that some local sectors like software, despite having self-sufficiency, are having no protection against imports, and taxing imported software would help dollar conservation and incentivize local firms.

The founder of local tech ventures like the leading job portal BD Jobs, e-commerce platform AjkerDeal, and smart logistics firm Delivery Tiger was worried about the tech adoption slowdown as smartphone purchases already halved in the country.

He urged fiscal incentives so that the hardware, connectivity, and relevant services crucial for a Smart Bangladesh do not get pricier.

Echoing Mashroor's sentiments, Mohammad Sahab Uddin, vice president of the E-commerce Association of Bangladesh, emphasised the need for tax waivers on e-commerce and startups until 2030. 

He pointed out that India's supportive measures for their digital economy have helped them grow 80,000 recognised startups and a hundred unicorns, while Bangladesh has only produced one unicorn. Uddin suggests that the government should let the digital economy grow before taxing it.

Startup entrepreneur Waseem Alim, co-founder and CEO of the online grocery platform Chaldal, agreed with Uddin and Mashroor, suggesting that e-commerce platforms should not be burdened with the responsibility of deducting VAT from suppliers. He believes that this puts them in uneven competition with offline peers who are not under practical VAT coverage.

E-commerce and startups should be tax-VAT waived till 2030, suggested both Sahab Uddin and Alim.
Masahroor proposed tax incentives for firms that hire fresh graduates, which is an important issue given the rising concern of graduate unemployment in the country. 

Subrata Sarkar called for duty reduction on the imported hardware for robotics and the internet of things as they even go as high as 80% in the country, unlike in the peer economies, and said the high duties would keep hurting the Smart Bangladesh mission.

He also rang his alarm bell against the halted IT projects of the government, meant to conserve dollars.

Even the payments against IT procurements are halted nowadays, being it for the state's significant agencies or other offices, said Subrata Sarkar.