Imposition of increased tax on the mobile phone industry contradicts the Foreign Private Investment (Promotion and Protection) Act, 1980 as such taxation would result in capital erosion for the loss-making overseas telecom operators, said telecom operators.
They also predicted that the overall cost of the mobile phone customers would increase by Tk 1,300 crore per annum due to the imposition of the increased rate of supplementary duty on phone calls.
The Association of Mobile Telecom Operators in Bangladesh made the observations at a press briefing on the proposed budget for the fiscal year of 2019-20 at the Sonargaon Hotel in capital Dhaka.
Acting AMTOB chairman and Robi managing director Mahtab Uddin Ahmed, AMTOB secretary general SM Farhad, Grameenphone corporate and regulatory affairs head Hossain Sadat, Banglalink chief corporate and regulatory officer Taimur Rahman and Teletalk regulatory and corporate relation officer Md Saifur Rahman Khan attended the briefing.
Mahtab said that there was an act to protect the interest of the foreign investments but the imposition of increased tax on turnover of the telecom operators contradicted the act.
‘We would face capital erosion if such taxation remains intact in the final budget,’ he said.
The government in the proposed budget for FY20 increased turnover tax on the telecom operators to 2 per cent from the existing 0.75 per cent.
Farhad said that around Tk 150 crore would go to the government exchequer from the loss-making telecom operators and such taxation was inconsistent with the foreign investor protection act.
‘In that context, why will the foreign investors make investments and how will the mobile phone operators make preparations for the upcoming investments when the 5G service would be launched in the country?’ he questioned.
Taimur said that such taxation would cost Banglalink around Tk 100 crore and it would weaken their financial strength as they had huge amount of accumulated losses despite operating in the country for around 20 years.
Hossain said that the imposition of 15 per cent tax on reserve of the listed companies was nothing but double taxation on any company’s earnings.
Such reserve is kept for further investments after the payment of taxes to the government and dividend to the shareholders, he said.
Speaking about the hike in SIM tax to Tk 200 from Tk 100, Farhad said that the increased tax would create addition burden of Tk 800 crore on the mobile phone operators.
He urged the government to eliminate 2 per cent tax on turnover of the mobile phone operators, reduce SIM tax to Tk 100 and tax on turnover.
He also urged the government to reduce import tax on smartphone to 5 per cent from the proposed 25 per cent so that the country’s internet penetration could be increased to the expected level.
Otherwise, low-income group of people in the country would be deprived of digitisation benefits, he said.
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