Payment for Digital Products

Mobile cos seek tax treatment similar to those enjoyed by banks, MFS

Jasim Uddin | Published: 22:43, Aug 09,2020


Mobile operators have sought tax treatment similar to those enjoyed by mobile financial service providers and banks on payment for digital products through airtime in the interest of customers and to create a level playing field for all platforms.

The operators in a recent letter to the National Board of Revenue sought adjustment of the supplementary duty and surcharge collected against payment of various digital services by mobile subscribers as there were no such taxes on purchase of digital products using MFS and cards issued by banks.

In the letter sent on July 9, the Association of Mobile Telecom Operators of Bangladesh said that mobile subscribers availed the digital payment option using mobile airtime balances through direct operator billing for various digitally consumable services.

But a customer who buys any digital content or service such as applications and games using airtime balance has to pay extra duties and taxes at the rate of 33.25 per cent on the payment since airtime balance is prepaid in nature, AMTOB claimed.

Games and apps are not telecom products or service as per the VAT law.

Mobile operators sell prepaid telecommunication airtime which is inclusive of a total 33.25 per cent duties and taxes, including 15 per cent supplementary duty, 17.25 per cent VAT and 1 per cent surcharge, AMTOB said.

On the other hand, SD, VAT and surcharge are not applicable on digital contents and services purchased using MFS like BKash and banks’ credit cards, it said.

The price of a digital content worth Tk 100 remains the same if the client purchases it through MFS or banks while it costs Tk 133.25 if he or she buys it using mobile airtime balance, it explained.

The mobile operators can adjust the VAT as per the VAT law.

‘End user price should be the same irrespective of source of fund,’ AMTOB wrote in the letter signed by its secretary general SM Farhad.

A mobile operator settles the end user price with the service providers after keeping its own commission as per the commercial agreement as its works as a payment gateway or collection agent like a bank and MFS provider.

Mobile operators pay the applicable VAT on commissions like a bank and MFS provider, it said.

Under the circumstances, consumer cost will go up significantly if mobile operators do not get the opportunity to adjust the extra SD and surcharge paid like VAT, it said.

It will also not ensure a level playing field for telecom operators and will block the pathway for digital payment, it added.

Considering the issues, AMTOB sought an adjustment process for the extra SD and surcharge paid as the VAT is adjusted to ensure consumer benefits, the letter said.

As per the Bangladesh Telecommunication Regulatory Commission 2018 directive on direct operator billing, mobile phone users can make online payments using airtime balance.

The method, however, is yet to become popular due to additional costs and lower limits of transactions.

The maximum limit for direct billing is Tk 600 per transaction up to Tk 3,000 per year.

Farhad on Sunday told New Age that the tax measures should be similar for all platforms offering similar services to ensure a level playing field for all.

Mobile subscribers are forced to pay higher taxes on purchase of digital contents and services like apps, games, tickets and food under the existing system, he said.

He also said that the transaction limit should also be raised considering the affordability of subscribers.

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