ICT trade bodies demand VAT-free internet

Leaders of three ICT trade bodies yesterday urged the government to reduce or erase 15 percent value-added tax on internet use in the next budget.
Bangladesh Association of Software and Information Services (BASIS), Bangladesh Computer Samity (BCS) and Internet Service Providers Association Bangladesh (ISPAB) made the call at a pre-budget dialogue at Ruposhi Bangla Hotel in Dhaka.
Zunaid Ahmed Palak, state minister for ICT, agreed with the demand and said the telecoms ministry would request the finance ministry to remove or cut the VAT on internet use in the next budget.
The telecoms ministry proposes Tk 3,700 crore for the ICT sector in the budget, which was Tk 1,250 crore last year.
The government will set up a research and development centre to scrutinise the best-fit IT-related businesses, Palak said.
People pay only 2.5 percent VAT on gold ornaments, a luxury product, but the government takes 15 percent VAT on internet use, which is an important tool to materialise the Digital Bangladesh dream, said Almas Kabir, senior vice president of BASIS.

The use of internet will get a boost if the VAT on the internet is removed, Kabir said.
He urged the government to extend the tenure of tax holiday on income tax in the ICT sector up to 2025, which will expire on June 30 next year.
BASIS leaders also demanded e-commerce services to be exempted from VAT to increase online payment and purchase.
Shamim Ahsan, BASIS president, urged the government to allocate 5 percent of the total budget for the ICT sector.
The government should provide the ICT entrepreneurs with loans on 8 percent interest by allocating Tk 5,000 crore for the sector, said AHM Mahfuzul Arif, president of BCS.
Akhtaruzzaman Manju, president of ISPAB, stressed the need for keeping the import tax on internet-related equipment and devices, including internet modem, router and optical fiber cable, within 4 percent.
Reduced import tax will slash transmission cost, which will ultimately cut internet prices in places outside of Dhaka, he said.