The National Board of Revenue (NBR) has empowered its tax officials to suspend the release and delivery of the cellular handsets if any company fails to comply with the newly introduced Information and Communication Development surcharge.
The board, on July 20, this year, issued a rule describing the methods of implementation, collection, payment and penal procedure of the surcharge, which is the first of its kind in Bangladesh.
The government, with its finance bill 2014 has imposed 1% surcharge on both the locally manufactured and imported cellular handsets, which was made effective from July 1, 2014.
The tax authority is eying Tk40 crore extra revenue collections from the surcharge in the current fiscal year as per the estimate made by the NBR.
According to the recently issued rule, the Value Added Tax (VAT) wing of NBR will collect the surcharge while collecting 15% VAT from both the imported and locally manufactured handsets.
The surcharge will have to be paid through treasury chalan or electronic transfer in specific code, the rule reads.
It also said customs, excise and VAT commissionerates will have to keep a separate monthly collection statements on surcharge collection as non-tax revenue receipts.
With the rule, the NBR has empowered its tax officials to impose penalty on the companies for the non-compliance with the above-mentioned sections.
According to the rule, if any company is fined for non-compliance with the rule and failed to pay the fine, any officer, not below the ranking of assistant commissioner can suspend the delivery or release of the handsets.
For the fiscal year 2014-15, the government withdrew 5% advance income tax and reduced customs duty to 5% from 10% on import of mobile sets while companies also have to pay 1% surcharge, along with 15% VAT on import of handsets.
The surcharge and the increased VAT would harm the growth of the growing sector as the handsets will now be more costlier than before and will also reduce the affordability of the lower income people, market insiders told the Dhaka Tribune.
They also said it would encourage smuggling and under invoicing for imposing the increased duties.
Bangladesh Mobile Phone Importers Association (BMPIA) General Secretary Rezwanul Hoque said: “Previously, around 60-70% imported handsets are feature phones and lower income people usually buy such phones at a minimum price of Tk1,000 each. But from now on, due to the latest tax hike, a consumer will have to pay over Tk4000 for buying a handset, which he could purchase earlier at Tk3000.”
He also feared that the illegal import of handsets, which is now around 4%, will be increased up to 20% as the tax hike would give a boost to the smugglers.