Mobile operators seek tax cuts

The mobile operators once again appealed to the revenue authority to reduce the corporate tax rate for the sector on the grounds that the current 40-45 percent is 'discriminatory'.

At present, a non-listed mobile operator has to pay 45 percent tax and a listed one -- which is only Grameenphone for now -- 40 percent. 

In contrast, excluding banks, insurers and other financial institutions and cigarette makers, companies that are not listed with the stock exchanges have to pay 35 percent tax on their annual incomes. Listed companies have to pay 27.5 percent corporate tax.

The present rate of corporate tax puts the mobile network operators, now six, in the same camp of cigarette manufacturers.

“Tobacco does not benefit the society but mobile does,” said Mahtab Uddin Ahmed, chief operating officer of Robi, while presenting the proposals in favour of Association of Mobile Telecom Operators of Bangladesh (AMTOB) to the National Board of Revenue at the tax authority's headquarters.

The AMTOB wants the revenue authority to reduce the corporate tax by 5 percentage points to 40 for non-listed mobile operators. For listed companies, it sought for a 10 percentage-point cut in corporate tax to 30 percent.

The mobile operators also urged the government to withdraw the Tk 300 SIM tax and Tk 100 SIM replacement tax as well as VAT exemption on internet usage and modems.

The operators said the measures will increase mobile penetration among the 16 crore population, which stands at 76 percent at present; boost internet connectivity and contribute to the country's economic growth.

The sector, being the biggest generator of revenue for the state, accounted for 2.63 percent of GDP in fiscal 2013-14, up from 2.56 percent the previous year, according to AMTOB.

An increase in mobile penetration of 10 percentage points typically boosts GDP growth by 1.2 percent, estimates AMTOB. It said the industry will grow further if SIM tax is eliminated.

The mobile operators will be able to extend network coverage in rural areas and connect the unconnected financially challenged people at the grass-root level, AMTOB said in its proposal to NBR. 

Currently, operators bear the SIM tax from their own pockets, although the tax is supposed to be paid by customers.

AMTOB, citing current internet penetration at 26 percent among mobile phone users, said exemption of VAT on internet use will facilitate the government's vision of Digital Bangladesh by 2021. 

“We will examine the proposals very objectively and try to do the best,” said NBR Member for Customs Policy Md Farid Uddin.