INTERNET VAT RATE CUT

No benefit for customers as mobile cos not to get VAT rebate: AMTOB

Staff Correspondent | Published: 00:05, Jul 06,2018

 
 

A file photo shows a man using internet on his mobile phone in Dhaka. The Association of Mobile Telecom Operators of Bangladesh on Thursday said that customers would not get benefit from the value-added tax cut on internet bills as the rate cut came with the suspension of VAT rebate facility the telecom entities enjoyed in internet business. — New Age photo

The Association of Mobile Telecom Operators of Bangladesh on Thursday said that customers would not get benefit from the value-added tax cut on internet bills as the rate cut came with the suspension of VAT rebate facility the telecom entities enjoyed in internet business.
In the national budget for the fiscal year of 2018-19, the government lowered the rate on internet bills to 5 per cent from 15 per cent.
Leaders of the association said the resulting suspension of the VAT waiver facility for the mobile operators would raise the prices of internet the operators would offer.
They made the statement at a press briefing held at the AMTOB office in Dhaka.
AMTOB secretary general and chief executive officer TIM Nurul Kabir said, ‘First of all, we did not seek partial reduction of VAT on internet, rather mobile phone operators requested the government to waive VAT fully on internet usage.’
Although the government has reduced VAT on internet usage, but it would not be possible for the operators to bring down internet prices due to an increase in cost burden on the mobile phone operators, he said.
The operators would deprive of VAT rebate under the existing taxation rules that would subsequently increase the cost of providing internet services by the mobile phone operators, Kabir said.
NBR officials said mobile operators could claim rebate on previously paid VAT during purchase of inputs like bandwidth if VAT was paid at standard 15 per cent rate.
But rebate is not applicable against the inputs if VAT is paid at reduced rate also known as truncated rate, they said.
They said that the VAT rate would also be 5 per cent for the purchase of bandwidth by the mobile phone operators from the nationwide telecommunication transmission network providers.
So, the operators would not get the rebate on the VAT paid for purchasing inputs for providing internet services through their network, they said.
Robi Axiata Limited regulatory affairs head Shahed Alam echoed Kabir, stating that as the truncated VAT rate would ultimately raise the internet business cost for the mobile phone operators; there would be no scope for the operators other than increasing the prices of internet packages.
To get rid of the situation, the government should withdraw VAT fully on internet usage or withdraw 5 per cent supplementary duty on the internet use, which would benefit both the customers and the mobile phone operators, Shahed said.
Kabir also said that they had sought clarification from the National Board of Revenue whether or not the reduced VAT rate on internet uses would be applicable for the internet usage by the customers through mobile phone operators as the NBR circular specifically mentioned ‘internet organisation’ under service code 12.14 and the mobile phone operators did not lie under the code and did not have internet-service providing licences.
‘Due to the confusion, mobile phone operators have continued collecting usual VAT rate from their customers on internet usage,’ he said.
NBR officials, however, said that mobile phone operators would be treated as internet organisation under the definition mentioned in the statutory regulatory order of the NBR.
At the briefing, the AMTOB also raised the issue of a Bangladesh Telecommunication Regulatory Commission directive on mobile network portability.
The commission issued the directive on June 25.
‘Although mobile phone operators have prepared them to start MNP service by August 1 in line with the BTRC’s previous order issued in April this year, it [the launch] has now become uncertain due to the BTRC’s directive facilitating IGW operators and forcefully imposing their [IGW operators] responsibility on the mobile phone operators in terms of handling international calls,’ Kabir said.
Banglalink chief corporate and regulatory affairs officer Taimur Rahman, Grameenphone external communications head Talat Kamal and Teletalk deputy general manager Md Saifur Rahman Khan were present at the briefing.

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