The National Board of Revenue has decided to set the VAT rate at 10 per cent, after reducing it from standard 15 per cent, on fees and charges for 4G licence and spectrum allocation to facilitate the auction for the technology.
The NBR on Sunday sent a summary to state minister for finance MA Mannan in this connection.
Value-added tax wing of the revenue board will issue an order soon after getting approval from the finance ministry.
The NBR took the decision after Large Taxpayers Unit (LTU-VAT) in a letter last week requested it to issue an order reducing the VAT rate on different fees and charges for licence and spectrum to be collected by the government from the mobile operators during the auction for ensuring revenue receipt.
Bangladesh Telecommunication Regulatory Commission will arrange the auction today (Tuesday) for spectrum allocation along with issuing 4G/LTE (long-term evolution) licence.
Mobile operators Grameenphone and Banglalink are scheduled to participate in the spectrum auction. Robi-Airtel and Teletalk has applied only for 4G licences.
The telecom regulator on December 22 also requested the revenue board to issue an instruction clarifying its position on VAT rates on 4G licence, spectrum fees and charges and other issues.
NBR in 2013 slashed the rate initially to 7.5 per cent and finally to 5 per cent on 3G licence fees from 15 per cent, following pressure from the mobile operators.
NBR was supposed to get around Tk 1,000 crore in VAT from 4G licence and spectrum fees if the VAT rate would remain at 15 per cent.
Now, it would get around Tk 650 crore in VAT due to reduction in rate, officials said.
LTU (VAT) recommended the revenue board to reduce the rate apprehending that the government might lose its expected revenue or revenue collection may be delayed without reduction of the rate.
Officials of the LTU said that mobile operators might refrain from paying 15 per cent VAT arguing that they would not be able to claim VAT refund as the BTRC do not issue VAT challan to them.
BTRC cannot issue VAT challan as it does not have VAT registration number, they said.
Even though the operators pay the VAT after BTRC gets VAT registration, the net VAT receipt will be zero as they will claim refund.
The mobile companies have not been paying VAT on some fees and charges on the same ground. The dispute on the issue is now sub judice matter at the High Court.
There is another case related to VAT registration of the BTRC that remains sub judice.
But mobile operators will not get VAT refund if the NBR reduces the rate.
NBR officials said that the LTU assured the NBR to realise the revenue if the rate was set at 10 per cent.
LTU in the letter, however, estimated that VAT receipt would be Tk 750 crore if the rate is set at 12 per cent.
Considering all aspects, the revenue board decided to set the rate at 10 per cent, said a high official of the NBR.
‘It would be better to get a little bit less revenue on time by reducing the VAT rate instead of delays in payment or even not getting at all,’ he said.
It is quite certain that the operators would not pay the VAT at 15 per cent now citing the refund issue, he said.
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