Telecom, steel seek tax cuts as tobacco firms split over govt revenue policy ahead of budget

Highlights:

• AMTOB proposed removing the 20% duty on mobile talk-time and data.
• Telecom operators face a 56% tax burden
• Tobacco and steel sectors demanded tax reforms
• NBR said it will consider proposals but cannot accept all due to revenue limits

The Association of Mobile Telecom Operators of Bangladesh (AMTOB) has proposed abolishing the 20% supplementary duty on mobile talk-time and data, along with other tax cuts, saying the current structure is restricting growth and digital inclusion.

The proposals were placed at a pre-budget meeting with the National Board of Revenue (NBR) in Agargaon, Dhaka, yesterday (27 April).

AMTOB said operators currently pay about 56% of gross revenue in taxes, VAT and other charges, compared to a global average of 22% and 26% in Asia-Pacific countries.

Secretary General Lt Col Mohammad Zulfiqar (Retd) said the tax burden rises further during spectrum auctions, weakening investment capacity and long-term sustainability.

The association also demanded removal of the 1% surcharge on telecom services and Tk300 VAT on SIM and e-SIM replacement, saying it discourages new users, especially low-income groups. 

The body further proposed reducing corporate tax rates from 40% (listed) and 45% (non-listed) to regional levels.

In the same meeting, tobacco sector representatives proposed changes to the tax system. British American Tobacco Bangladesh (BATB) proposed replacing the ad-valorem system with a specific tax system.

Arafat Jaigirdar of BATB said, "As the current tax rate is up to 83%, including VAT, supplementary duty, and surcharge, there will be limited scope for increasing government revenue in the future. Therefore, the existing ad valorem system can be replaced with a specific tax system."

He said the change would increase revenue and reduce pressure on companies. Japan Tobacco International Bangladesh and Philip Morris Bangladesh supported the proposal.

However, Abul Khair Tobacco opposed the proposal and suggested increasing prices in the upper three tiers under the existing system, claiming it could generate an additional Tk10,000 crore annually. The tobacco sector currently contributes about Tk50,000 crore to government revenue each year.

National Board of Revenue Chairman Md Abdur Rahman Khan said cigarette prices and tax rates would be reviewed in line with South Asian standards.

The Bangladesh Steel Manufacturers Association (BSMA) urged the government to reduce income tax, customs duties and VAT on the steel sector in FY2026-27, citing pressure from rising costs, currency depreciation and global instability.

BSMA President Mohammad Jahangir Alam said the steel industry is facing a deep crisis due to depreciation of the taka, dollar shortage, high interest rates, rising utility costs and increased taxes and VAT in FY2025-26. He also cited political instability, the COVID-19 impact, the Russia-Ukraine war and the slowdown in infrastructure projects.

BSMA proposed reducing advance income tax on raw material imports to Tk500 from Tk600, cutting tax deducted at source on rod sales to 1% from 2%, reducing turnover tax to 0.5% from 1%, and allowing adjustment of advance tax.

The association said a new VAT of Tk1,800 per metric tonne has been imposed on imported raw materials despite earlier duty withdrawal. It called for the rationalisation of taxes and duties in the next budget.

NBR Chairman Md Abdur Rahman Khan said not all demands could be met due to revenue constraints, but reasonable proposals would be considered. He said HS code issues would be reviewed and import values aligned with international prices.

Multiple trade bodies, including steel, re-rolling mills, iron importers, chemical importers, paint, cosmetics, lubricants, fisheries, marine products, auto parts and electronics associations, attended the meeting.