Broadband, smartphones, laptops to cost more

With prices of mobile phones and broadband internet set to go up in the next fiscal year, the proposed budget would not be favourable to further development of the ICT sector, experts have said.

While many people do not own a phone and the majority do not have smartphones, 5 percent VAT on mobile phone sales will severely hurt consumers amid the price hike of almost all products and services.

The consumers will ultimately pay for the 10 percent advance income tax on broadband internet service, stalling the growth of the internet users during the pandemic.

The government also proposed 15 percent VAT on laptop imports which will exacerbate the consumers' owes as disrupted global supply chain and soaring dollar price have already increased price of the device by over 10 percent.

On top of that, the budget proposal did not pay heed to different ICT associations' demands, including waiver of minimum income tax for the loss-incurring digital platforms, exemption of VAT from digital commerce and VAT reduction from delivery fees.

"The proposed budget is not supportive of the development of technology industry and digital commerce. None of the proposals the tech industries made before the NBR has been accepted," said AKM Fahim Mashroor, CEO of AjkerDeal.

Emdadul Hoque, president of Internet Service Providers Association of Bangladesh, said despite the prime minister's directive, the internet service providers were not included in the list of IT enabled-services entities, which get different types of tax exemptions.

"Rather, the NBR has slapped 10 percent advance income tax on internet service. As our profit margin is far below 10 percent, ultimately, we have to rise internet price by 10 percent, and end-users will suffer."

However, there is some good news for the start-up and technology sector.

One of them is cutting turnover tax on start-ups to 0.1 percent from the current 0.6 percent in the next fiscal year and withdrawing the restrictions on expenditure for start-ups.

But the start-ups launched prior to fiscal 2017-18 will be outside the purview of the privileges.

"But most of the reputed start-ups like Chaldal, Shopup, Pathao, AjkerDeal, Paperfly and Truck Lagbe will not avail the benefits because they are over five years old," said AjkerDeal CEO Mashroor.

It would bring cheers to the local technology industry as the government has extended concessional import duty on raw materials for manufacturing battery, LCD, touch panels and printed circuit board (PCBs) for assembling computers in Hi-tech parks.

In another development, Tech giants such as Google or Meta (Facebook) will have to submit income tax returns to NBR from the next fiscal year.

Syed Almas Kabir, former president of Bangladesh Association of Software and Information Services, said, "I expected that the government would prepare the next national budget in the spirit of Digital Bangladesh. Unfortunately, the extra VAT on mobile-based services, including mobile banking, ride-sharing, seems to be in contradiction to it."