The government has reduced value-added tax on services of internet infrastructure companies to 5 per cent from existing 15 per cent following demand of the companies, mobile operators and the posts, telecommunications and information communication technology ministry.
The reduced VAT rate will be applicable on services provided by International Terrestrial Cable (ITC), International Internet Gateway (IIG) and Nationwide Telecommunication Transmission Network (NTTN) companies.
Internet service providers and mobile operators require services from these three sectors to reach the services to the end consumers.
VAT wing of NBR on Monday issued a statutory regulatory order in this connection.
Earlier, NBR reduced VAT on ISPs and mobile operators to 5 per cent from 15 per cent which ultimately paid by consumers.
ICT ministry put forwarded the proposal of slashing VAT on the services arguing that it would reduce internet costs at consumer end as previous decision of VAT cut at consumer stage failed to bring down the price.
Mobile operators and ISPs also said that they generally could not bring down the price of internet due to complexities in getting VAT rebate.
They are not getting rebate on 15 per cent paid at previous three stages—ITC, IIG and NTTN—as NBR, as per law, don’t provide rebate if there are any reduced or truncated VAT rate at any stage of business process.
ICT ministry and industry insiders demanded the VAT cut to remove the complexities.
According to NBR analysis, the government will lose around Tk 1,200 crore to Tk 1,300 crore a year due to the waiver.
NBR officials said the rebate related problems would not be solved even after reduction of VAT on ITC, IIG and NTTN as there was another stage of backward infrastructure for internet service on which 15 per cent VAT is applicable.
The infrastructure companies will not get rebate on VAT to be paid, they said.
They said that VAT officials tried to explain the issue to ICT ministry and NBR high-ups about the future problems, but ICT minister Mustafa Jabbar and NBR high-ups advised the VAT officials to go forward in line with demand of ISPs and mobile operators.
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