Telcos’ revenue growth thin amid high taxes: GSMA

Staff Correspondent | Published: 23:26, May 06,2021


The country’s telecom sector has been slapped with the third highest tax rates in the world, resulting in lower capacity of the telecom operators to invest in development of the ecosystem.

A GSMA report titled ‘Accelerating Digital Transformation in Bangladesh: Recommendations for Mobile-sector Taxation Reform’ said that the telecom operators in 2019 paid Tk 11,900 crore in taxes, representing 44 per cent of the total mobile sector revenue.

The tax rate for telecom operators in Sub-Saharan Africa is 26 per cent, 24 per cent in the Middle East and North Africa, 24 per cent in Asia Pacific, 21 per cent in Europe and 18 per cent in Latin America, the report showed.

The GSMA report was presented at a roundtable discussion on Thursday jointly organised by the GSMA, a global platform of the telecom operators, and the Association of Mobile Telecom Operators of Bangladesh.

Speaking about the high taxation issue in the telecom sector, Banglalink chief executive officer Erik Aas said that high rates on the telecom operators were hindering the growth of the mobile phone companies. The tax rate should be at a level which allows the telecom companies to grow, Erik said.

Before the Covid outbreak, the telecom companies had a growth rate of 4 to 5 per cent but the rate has come down to around 1.5 per cent during the pandemic, he said.

AMTOB representing vice-president Jens Becker said that the taxation policy suggested that the government was considering the mobile sector to be a luxury good even though the telecom operators were playing a significant role in the country socioeconomically by developing the back-bone of digitisation while the service had become an essential good.

He questioned how the telecom operators were to invest when they were slapped with taxes at the rate 44 per cent?

AMTOB president and Robi Axiata managing director and chief executive officer Mahtab Uddin Ahmed said that the NBR understood the issue properly but had not addressed it for unknown reasons.

A taskforce can be established to do a proper study on the taxation situation in Bangladesh and the recommendations of the taskforce can be put to use afterwards, he said.

Among the 24 countries where Robi’s parent company operates, the taxation rate in Bangladesh is the highest, he said, adding that the operator has paid 73 per cent taxes on its profit.

National Board of Revenue member Pradyut Kumar Sarkar clarified that the tobacco companies were paying the highest taxes while some information and communication technology companies were receiving tax exemptions.

Mentioning that the NBR followed the ‘Super Taxation Concept’ for the telecom companies, Pradyut, however, found the arguments made by the telecom companies to be logical.

Prime minister’s private industry and investment affairs adviser Salman Fazlur Rahman and posts and telecommunications minister Mustafa Jabbar agreed that the telecom operators’ demand should be reviewed.

Salman said that the revenue growth of the telecom operators should remain above the inflation rate.

Even if the corporate tax rate and the minimum turnover tax of the telecom operators are reviewed, there must be a guarantee that the operators would continue to invest and would pass on the tax benefit to the customers, he added.

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