The government has set a reduced value-added tax rate (5 per cent) on 4G licence and spectrum fees and related charges, giving the mobile operators at least Tk 275 crore in tax relief.
The National Board of Revenue on Monday issued an order setting the VAT rate at 5 per cent, which was approved by finance minister AMA Muhith earlier on the day.
Earlier, Large Taxpayers’ Unit of the revenue board recommended that the VAT rate should be set at 10 per cent, under which NBR would have got around Tk 550 crore in VAT from the mobile companies.
The NBR sent a summery last week to Muhith for setting the VAT rate on 4G licence and spectrum fees and related charges with the proposal that the VAT rate could be set at 5 per cent or 10 per cent.
Muhith ultimately went for the lower rate (5 per cent), for which the NBR would get around Tk 275 crore less revenue from the mobile companies, said NBR officials.
The usual VAT rate in the country is 15 per cent, but NBR wanted to set the rate at 10 per cent considering the fact that mobile companies get rebate on VAT if it is set at 15 per cent and that the reduced rate would ensure quick realisation of revenue from the mobile companies.
Country’s three private sector mobile companies, Grameenphone, Banglalink and Robi, and state-run Teletalk got the 4G licences on Monday while GP and Banglalink also purchased additional spectrum for the 4G services, which allow faster internet speed.
The NBR in its Monday’s order asked the Bangladesh Telecommunication Regulatory Commission to ensure collection of the VAT from the mobile companies before the licences became effective.
Earlier, the NBR also set the VAT rate at 5 per cent for 3G licence and spectrum charges in 2013 amid pressure from the mobile companies.
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