Mobile SIM replacement tax may be scrapped

Highlights:

• Current tax per SIM replacement is Tk200
• Around 65 lakh SIMs are replaced each year
• Govt could lose Tk130 crore in revenue

The existing value-added tax (VAT) on mobile phone SIM replacement may be withdrawn. According to sources at the finance ministry, the tax on IoT SIM replacements may also be removed.

At present, a Tk200 tax is charged for each SIM replacement. 

An IoT (Internet of Things) SIM card is a specialised cellular SIM designed to connect smart devices, sensors, and machines to the internet rather than mobile phones.

Officials at the National Board of Revenue (NBR) said the SIM replacement tax may indeed be withdrawn. Speaking to The Business Standard on condition of anonymity, a senior NBR official said removing the tax could result in around Tk130 crore in forgone revenue.

Mobile operators have described the move as a positive one. They say it is a reasonable demand and that they have long been calling for the SIM replacement tax to be removed. According to them, eliminating the tax would also boost investor confidence in the sector.

Data from the Bangladesh Telecommunication Regulatory Commission (BTRC) shows that as of April, the country had 18.7 crore registered SIMs.

According to mobile operators, around 65 lakh SIM replacements take place in Bangladesh every year. In 2023, the government set the tax at Tk200 per SIM replacement, though the rate had varied before that.

Additionally, around 6 crore new SIMs are sold every year, each also subject to a Tk200 tax. Altogether, the government earns roughly Tk1,300 crore in revenue annually from this sector.

SIM replacement is typically needed when a phone is stolen, when a SIM becomes damaged, or due to improper handling.

Operators argue that because tax has already been paid once on the SIM, charging tax again on its replacement amounts to double taxation.

NBR officials said the government's top level instructed the board to consider abolishing the SIM replacement tax as part of broader efforts to improve the ease of doing business. As a result, the NBR is preparing to introduce the change through the Finance Bill in the upcoming budget.

Shahed Alam, chief corporate and regulatory officer of Robi Axiata Limited, told TBS,
"We have heard that the government has taken an initiative to withdraw the tax on SIM replacement. If this happens, it will be a good move after a long time – and it will also validate the logic behind our longstanding demand.

"If this is implemented, investors in the sector will feel more encouraged to invest."

According to BTRC data, Grameenphone currently has the largest subscriber base in Bangladesh with around 8.5 crore users, followed by Robi Axiata with 5.78 crore, Banglalink with 3.75 crore, and Teletalk with 68 lakh.