Telcos seek corporate tax cuts

Telecom operators yesterday placed a slew of demands before the government, including slashing corporate tax from 40 per cent and 45 per cent to 25 per cent and 32.5 per cent for listed and non-listed entities respectively. 

"Corporate tax for mobile operators is too high which needs to be brought down to a rational level," said SM Farhad, secretary general of the Association of Mobile Telecom Operators of Bangladesh (Amtob), at a post-budget press conference.

"Mobile network operators are suffocating due to high taxation. Without rationalisation of taxation, this sector will not be able to contribute to its full potential," he added.

According to the Amtob, corporate tax is 29 per cent in Pakistan, 28 per cent in Sri Lanka, 30 per cent in Nepal, 25 per cent in Myanmar.

The operators' also demanded withdrawal or rationalisation of the minimum 2 per cent turnover tax imposed on unprofitable carriers and withdrawal of supplementary duty and surcharge from direct operator billing.

They sought amortisation facilities on all intangible assets and abolishment of a Tk 200 tax on mobile SIM purchases.

They also want the government to reduce the existing 33.25 per cent and 21.75 per cent VAT, SD, and surcharge over Tk 100 talk time and Tk 100 internet usage respectively to a reasonable level.

"While mobile market revenue accounted for 1.1 per cent of the country's GDP in 2019, the sector's tax and fee payments accounted for around 4.4 per cent of total government tax revenue," said Farhad.

"This means that the mobile tax contribution is 4.2 times its size in the economy," he said.

He said despite the expansion of mobile coverage, about half of Bangladesh's population (46 per cent unique-subscriber penetration) remains to be connected to the mobile network. Reforming mobile taxation is therefore key to accelerating digital inclusion, he said.

"According to the International Telecommunication Union, a 10 per cent increase in mobile broadband penetration would yield 2.43 per cent increase in GDP per capita in the developing countries. Therefore, the government can easily catalyse GDP growth by lowering the taxation structure," he said.

Taimur Rahman, chief corporate and regulatory affairs officer at Banglalink, said, "We are disappointed to see that our reasonable demand for a few revisions has not been addressed in the announced budget."

"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," he said.

Hossain Sadat, director and head of public and regulatory affairs, Grameenphone, said rationalising the taxation systems would accelerate the digital journey as the telecom sector has been considered an emergency service during the pandemic.

Shahed Alam, chief corporate and regulatory officer at Robi, said, "Despite making our demands based on thorough analysis, we, as an industry, are continuing to get deprived from the budget every year."

"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," he said.