Tax hike may lower earnings of govt, telcos

says AMTOB

Staff Correspondent | Published: 22:21, Jun 16,2020


The Association of Mobile Telecom Operators of Bangladesh on Tuesday demanded the withdrawal of the newly imposed 5 per cent supplementary duty on the mobile phone use in the proposed budget for the fiscal year 2020-2021.

The AMTOB made the demand at an online press briefing held in Dhaka on the day where its president and Robi chief executive officer Mahtab Uddin Ahmed, secretary general SM Farhad, Grameenphone director and regulatory affairs head Hossain Sadat, Robi chief corporate and regulatory officer Mohammed Shahedul Alam and Banglalink chief corporate and regulatory affairs officer Taimur Rahman attended.

Finance minister AHM Mustafa Kamal increased SD on mobile phone usage to 15 per cent from 10 per cent in the proposed budget for FY21.

With the imposition of additional 5 per cent supplementary duty, the applicable taxes on voice call and data use has reached 33.25 per cent and 21.75 per cent respectively.

The government’s move came in just one year of increasing SD to 10 per cent from 5 per cent in FY20.

Mahtab Uddin Ahmed said, ‘We are very sad to see that the telecom taxation has once again moved further away from the spirit of digital Bangladesh vision in the proposed budget for 2020-21.’

‘When we are frantically trying to close the digital divide, we see SD being raised yet again taking access to mobile connectivity beyond the reach of the people with limited purchasing power,’ he said.

‘Besides, the proposed Budget doesn’t even attempt to address the long-standing issues we have with the investment climate engineered by the taxation regime,’ he said.

‘For example, on top of the corporate tax of 45 per cent for non-listed operators, which is the highest in the world, 2 per cent minimum turnover tax is crippling the financial health of the struggling operators, particularly,’ Mahtab said.

The imposition of additional 5 per cent supplementary duty on the mobile services will not only increase the cost of services for the customers but also will contradict the digital vision of the government, said Shahed.

The increased taxes on the sector would be a future loss for the government as there was scope of gaining higher revenue in future, he said.

If the customers fail to afford the service, the government and the mobile phone operator would lose revenue, he said.

The government should not impose higher taxes on the telecom only because that the government can materialise it, Taimur said, adding, ‘The government should think about the long-term benefit instead of only thinking about short-term benefit.’

Echoing others, Hossain Sadat urged the government to withdraw additional supplementary duty.

Asked whether the operators conveyed their concerns to the government formally, SM Farhad said that they had already informed the telecom minster Mustafa Jabbar regarding the impact that the telecom sector would face due to the increased SD and the minister informed that he would communicate the matter to the finance ministry formally.

Mentioning that around 65 per cent of the country’s mobile phone subscribers are feature phone users and they are using phone for making calls and sending message, he said that even the government earnings would decline after the hike in SD if the feature phone users reduced using service due to the hike.

Want stories like this in your inbox?

Sign up to exclusive daily email