Tax hike to affect digital business | The Daily Star
12:00 AM, June 17, 2019 / LAST MODIFIED: 12:51 AM, June 17, 2019

Tax hike to affect digital business

Trade bodies say online shopping should be exempted from VAT for at least five more years

Four tech-centric trade bodies yesterday said the proposed budget would hinder the growth of digital business and increase costs for consumers.

The government has proposed increasing some taxes, including value-added tax, on different services which will ultimately increase the cost of doing business, the leaders of the oganisations opined.

However, the leaders of Bangladesh Association of Software and Information Services (BASIS), Bangladesh Computer Samity, Internet Service Providers Association of Bangladesh (ISPAB) and Bangladesh Association of Call Center and Outsourcing (BACCO) welcomed the overall budget for 2019-20.

They also said there are some anomalies in the proposed budget, which need to be addressed to continue the sector’s growth.

They made the call at a press conference at Pan Pacific Sonargaon Dhaka. The four platforms also demanded that online shopping get exempted from VAT for at least five more years.

Lamenting the finance minister’s suggestion on Thursday for imposing 7.5 percent VAT on the virtual business, Syed Almas Kabir, president of the BASIS, said it was not what was expected for digital services.

“Shoppers just started spending though this platform…first we need to give time for the industry to grow and then the tax issue can come,” he said.

ISPAB President MA Hakim raised concerns over increasing VAT on fibre optic cables, which he termed “the backbone of the digital ecosystem”.

“This initiative will definitely increase our cost of doing business and that will be passed on to customers who are using broadband services,” he said.

“Already we have talked with the state minister for ICT and he promised placing our demand before top policymakers of the government,” he added.

Kabir said the internet-based industry would face a disaster if the proposal to increase supplementary duty on smartphone import from 10 to 25 percent gets go-ahead.

“This decision will increase the cost of handsets by at least 20 percent,” he said.

“It is true that some five companies have started assembling handsets in the country but they can hardly meet 30 percent of the demand for which the rest 70 percent is met through imports,” Kabir added.

He said in order to take the digitalisation movement forward, the government should sit with all the policymakers to present a long-term tax policy that would enable investment sans confusion.

“Surprise tax always confuses businesspeople,” he said.

The BASIS president also demanded expanding the definition of information technology enabled services to bring in more companies under its purview, thereby revenue collection through the 5 percent VAT imposed on their services.

Bangladesh Computer Samity President Shahid-Ul-Munir spoke against a 5 percent advance income tax and increasing VAT on sale of imported computer and related hardware up to 7.5 percent from 5 percent.

The bodies, however, welcomed the Tk 100 crore fund allocation for start-ups and reduction of VAT on digital marketing. They requested creating another fund to help the outsourcing industry grow. The BACCO secretary general also spoke on the occasion.

 

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