Telcos unhappy over 5% SD hike in mobile services

The finance minister has proposed increasing the supplementary duty (SD) from 10 per cent to 15 per cent on services provided through mobile phone SIM/RIM card.

The mobile operators have already implemented the new SD rate with effect from last night. 

With the new tax rate, customers will have to pay a 33.25 percent tax to the government for mobile phone use. To avail service worth Tk100, users will have to recharge their mobile phones for Tk133.25. 

Mobile operators are afraid that the new tax measure will impact the sector very badly amid the economic fallout caused by the outbreak of Covid-19. 

They said that the government has been weakening the mobile phone sector by imposing tax burdens on it on a regular basis, which in turn has been creating pressure on users. 

Therefore, they urged the government to rethink the decision in the interest of customers. 

Association of Mobile Telecom Operators of Bangladesh (AMTOB) general secretary Brig Gen S M Farhad (Retd) said that despite significant contributions of the mobile telecom sector to the country's economy, the government has been weakening the sector by imposing more and more taxes on a regular basis. 

As a result, the existing 7% contribution of the mobile phone sector to the country's GDP, which was supposed to be double-digit, may not be achieved.

"This year, the government has increased the SD on all mobile services from 10% to 15%, which is very disappointing. This will put extra pressure on customers. Since the SRO has been released, the new pricing will be effective from midnight tonight."

"We have made continuous requests for the current minimum turnover tax of 2% for non-profit companies to be abolished and for the corporate tax to be reduced. But our requests have not been considered, which is extremely disappointing," he added. 

Grameenphone, the largest mobile carrier of the country, also said that it will result in an additional burden for customers who need essential communication services most during the Covid-19 pandemic and beyond. 

"Such a decision will also be unfavorable to unlocking the possibilities for Digital Bangladesh. We urge the government to reconsider this decision before implementing it, in the interest of our valued customers," said Hossain Sadat, director and head of public & regulatory affairs, Grameephone. 

Meanwhile, Robi, the second largest mobile operator of the country, opined that this increase is very unfortunate even as they have been requesting the government to withdraw 2% minimum tax on the operators' revenue imposed in last year's budget. 

"We are very sad that even after making significant contributions towards a realisation of the vision of Digital Bangladesh by 2021, the telecom sector's problems have been completely ignored in the proposed budget," said Shahed Alam, chief corporate and regulatory officer, Robi Axiata Limited.  

Banglalink, another leading mobile operator in the country, also called upon the government to waive the SD on the service. 

In an immediate budget reaction, Banglalink's CEO Erik Aas said, "Our customers are already using telecom services by carrying a heavy tax burden. An additional 5% SD on telecom services will especially affect less privileged consumers, and this in turn will limit their ability to participate in the digitalisation of Bangladesh." 

Moreover, he urged the government to withdraw VAT on internet in view of the impact of coronavirus-induced economic crises on internet users. 

"We also request the government to reconsider the minimum tax imposed on mobile operators, as we are yet to make profits," he added.