Mobile phone operators should focus more on improving the quality of service to get tax exemption, said Posts and Telecommunications Minister Mustafa Jabbar yesterday.

Citing call drop, low internet speed and the lack of network coverage, he said the Bangladesh Telecommunication Regulatory Commission (BTRC) regularly received thousands of complaints against mobile phone operators about their poor service.

He asked the operators to be proactive in improving the quality of service considering the interests of consumers.

The minister said the telecom ministry might put forward a proposal to the government to exempt the SIM tax of Tk 200 if the operators could prove that they had improved the quality of the service and people received the benefit.

"We will propose to the government to withdraw the SIM tax in the next budget," said the minister, while speaking at the virtual launch of the GSMA's Bangladesh Mobile Industry Tax Study.

Salman F Rahman, the adviser to the prime minister on private industry and investment, said the government might consider the tax exemption if mobile operators could ensure consumers' comfort.

The telecom sector is the foundation of the digital economy, but unfortunately, the taxation regime undermines its contribution to the economy, said Mahtab Uddin Ahmed, president of the Association of Mobile Telecom Operators of Bangladesh (AMTOB).

"Telecom pays more than its fair share of tax compared to other industries including tobacco, constraining investment capacity to build the digital infrastructure," he said. 

"Considering the socio-economic contribution of the mobile sector, we urge the government to facilitate an investment-friendly taxation regime and enable us to accelerate the digital transformation journey."

In a press release, Julian Gorman, head of Asia Pacific for the GSMA, a global telecoms association representing more than 750 operators, said: "Bangladesh's digital vision is at real risk without an internationally competitive industry tax policy."

One of the most strategic policy instruments Bangladesh can wield to accelerate the economic recovery and close the digital divide is to reduce the 44 per cent tax burden – the third highest in the world – on the mobile telecommunications sector, according to the research published by the GSMA.

Almost half of every Tk 100 in revenue for mobile network operators is paid to the government in taxes and regulatory fees – almost twice the average of the Asia-Pacific region. And Bangladesh's economy and population pay the price in many ways, the press release said. 

The GSMA study showed that the mobile tax contribution is 4.2 times its industry size in the economy, indicating that tax policy has ignored the significant positive externalities of the sector.

To redress the imbalance, the GSMA recommended that mobile sector taxation levels be aligned with the rest of the economy.

The minimum turnover tax should be reduced to 0.5 per cent from the current 2 per cent. The GSMA estimates that this reduction would increase GDP by $476 million with an annual gain in tax revenue of $47 million after five years.

The corporate tax rate should be reduced for non-public companies to 40 per cent from the current 45 per cent, and simultaneously for public mobile operators to 35 per cent from 40 per cent. This reduction would add $131 million to GDP while increasing tax revenue by $14 million annually after five years, the press release said.

Posts and Telecoms Secretary Md Afzal Hossain and BTRC Chairman Shyam Sunder Siker also spoke at the webinar.