Lift VAT on internet use: telcos
Mobile operators once again urged the revenue authority to withdraw VAT on internet use and modem sales, at a pre-budget discussion yesterday.
The Association of Mobile Telecom Operators of Bangladesh (AMTOB) put forward its budget proposals for the upcoming fiscal year, along with its long-pending demand for the removal of SIM taxes, to the National Board of Revenue at the latter’s office.
TIM Nurul Kabir, secretary general of AMTOB, said there is 15 percent VAT on internet use and modem sales at the moment; if the government decides to withdraw it, the cost of internet will reduce and volume of use will go up drastically.
“The NBR may think it will lose money if the VAT is withdrawn, but we can assure that the government’s overall earnings will increase,” said Kabir. “Internet will drive digitisation and so we need to concentrate on increasing the number of users.”
Withdrawing the VAT will increase the number of internet users and will contribute to the development of the economy, he added. The number of active internet subscriptions stands at an overwhelming 6.13 crore as of March, according to Bangladesh Telecommu-nication Regulatory Commission.
A majority of the subscriptions -- about 94 percent -- is dominated by mobile internet. The mobile operators also urged the government to withdraw the Tk 100 SIM tax and Tk 100 SIM replacement tax as well.
The telecom sector's contribution to gross domestic product is increasing every year; it will go up further if the government and regulator can gain the investors' confidence, said Kabir.
The sector, being the biggest revenue earner for the state, accounted for 2.7 percent of GDP in fiscal 2014-15, up from 2.6 percent in the previous year, according to the AMTOB.
In 2013 and 2014, the industry's revenue was Tk 20,200 crore and Tk 21,100 crore respectively, and of the amounts, they contributed Tk 13,500 crore and Tk 10,700 crore to the government exchequer, the AMTOB added.
Taimur Rahman, a senior director of Banglalink, said they want a long-term tax plan from the regulator. “In the past, we have seen that the government introduced taxes in the mobile sector for short term gains,” he said.
“It is time that the government realises the impact of communication and enhancement of knowledge through data proliferation, which increases the skills and knowledge level of a country.”
An increase in mobile penetration by 10 percentage points typically boosts GDP growth by 1.2 percent, according to AMTOB estimates.
Alauddin, head of corporate finance at Robi, said if the government fairly addresses the corporate tax issue, it will help the operator go for an initial public offering within a short time.
The industry also demanded the government allow them to file income tax returns in the January-December period, just like banks, instead of July-June at present.
NBR Chairman Md Nojibur Rahman said they will consider the demands in a rational manner. He also called upon operators to pay all dues soon.