Telcos asked to implement immediately reduced VAT rate on internet

HM Murtuza | Published at 12:42am on July 22, 2018


A file photo shows a man browsing internet on his mobile phone in Dhaka. Bangladesh Telecommunication Regulatory Commission on Thursday asked mobile phone operators to adjust immediately the prices of internet packages in line with the reduced value-added tax rate. — New Age photo

Bangladesh Telecommunication Regulatory Commission on Thursday asked mobile phone operators to adjust immediately the prices of internet packages in line with the reduced value-added tax rate.
The government in the budget for the fiscal year of 2018-2019 reduced VAT on internet to 5 per cent from 15 per cent with a view to making internet more affordable.
Mobile phone operators were supposed to implement the reduced VAT rate immediately after the issuance of statutory regulatory order by the National Board of Revenue on June 28 this year in this regard.
In line with the budget decision and subsequent SRO of the NBR, the telecom regulator on Thursday again asked the operators to adjust their internet-package prices as the operators were still collecting 15 per cent VAT from the customers on internet bills, an official of the commission told New Age.
The commission in its letter also mentioned that the commission, after the budget, asked the operators twice to adjust the internet prices but the operators refrained from implementing the BTRC instructions.
The commission in its first letter asked all the telecom operators to adjust internet prices by July 6.
In the second letter, the mobile companies were asked to adjust the prices within July 12 but the mobile phone operators took no heed to the commission’s instruction.
The mobile operators, however, informed the commission that they were in talks with the NBR about whether the reduced rate would be applicable for the internet use through mobile phones.
The BTRC official also said that the commission might follow legal procedure against the telecom companies if they continued to disobey the BTRC instruction.
Meanwhile, the BTRC has also issued letters to the internet service providers instructing them to implement the reduced rate.
Following the instruction from the telecom regulator, the Internet Service Providers Association Bangladesh on Wednesday announced that the members of the association decided to adjust internet prices in line with the reduced VAT rate with effect from July 1, ISPAB general secretary Emdadul Haque told New Age.
He, however, said, ‘Internet service providers will be in deep trouble if VAT waiver [previously enjoyed by the ISPs] is fully withdrawn.’
Earlier, on July 5, the Association of Mobile Telecom Operators of Bangladesh secretary general and chief executive officer TIM Nurul Kabir at a press briefing said, ‘First of all, we did not seek partial reduction of VAT on internet; rather the 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.
Under the new rules, the operators would not get the rebate on the VAT paid for purchasing inputs for providing internet services through their network, he said.
Kabir also said that they had sought clarification from the NBR whether or not the reduced VAT rate on internet uses would be applicable for the internet usage by the customers through the 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, the mobile phone operators continue collecting usual VAT rate from their customers on internet usage,’ he said.
NBR officials, however, said that the mobile phone operators would be treated as internet organisation under the definition mentioned in the statutory regulatory order issued by the revenue board.