'High taxes obstacle to telecom sector's growth'

High taxes proposed in the budget for 2019-20 will affect the growth of telecom sector, officials involved in the sector said on Wednesday.

In the proposed budget, supplementary duty (SD) on mobile usage has been increased from 5% to 10%, while SIM tax was raised from Tk100 to Tk200, SD on smartphone import was also raised from 10% to 25%, and mobile operators' turnover tax rose from 0.75% to 2%. The draft budget also imposed a 15% tax on retained earnings of listed companies. 

They came up with the remarks during Telecom Reporters' Network Bangladesh (TRNB)'s roundtable discussion titled "Proposed Budget: Reality in Telecom Sector" at Hotel La Vinci in the capital.

Additional Secretary of the Ministry of Telecommunications, Saiful Islam claimed telecom sector has the capacity to pay the said taxes. "We have received written document from telecom operators to reconsider this policy. Hopefully, something positive will come out from all this.”

Member, National Board of Revenue (Tax Survey and Inspection) Miftah Uddin Khan said: "NBR only takes decision after consulting with the prime minister, and finance minister. This is its sole decision to make."

Robi CEO Mahtab Uddin Ahmed said: “The government should be focused on increasing mobile penetration between 80% to 100%, which is now 55% to 60%. If it grows then the government will receive huge revenue. Otherwise, the telecom sector will be adversely affected."

Mobile Phone Consumers Association president, Mohiuddin Ahmed said that Government officials say homeless people are also using mobile phones. Hence the question arises why will new taxes be imposed on them?”

Saifur Rahman Khan of Regulatory and Corporate Relations of Teletalk Bangladesh Ltd, refuted such claims, remarking if various taxes, and duties are completely eliminated, it would be difficult for small companies like Teletalk to run their business.

Banglalink Head of Tax, Sarwar Hossain Khan demanded clear guidelines on VAT registration of government agencies, and regulatory bodies for VAT-imposable services. 

Hossain Sadat, director and head of regulatory affairs, Grameenphone said: "If the government did not impose taxes, Bangladesh would have gotten additional market penetration, and earned more revenue, which would have eventually taken the country towards digitalization.”

"The handset and sim tax is a hurdle for the telecom industry while software products got incentive,” said AMTOB's former secretary general TIM Nurul Kabir. 

Robi Chief Corporate and Regulatory Officer, Shahed Alam said that if the proposed tax is implemented, the government will get over Tk3,000 crore. On the contrary, if government does not increase the SIM tax, then the government's tax income will be more than Tk6,000 crore.

TRNB president Mujib Masud, general secretary Mazharul Anwar Khan Shipu, treasurer Shamim Jahangir were also present among them.

Six points demand

Among the six recommendations made by the speakers, included was withdrawal of SIM tax, corporate tax, tax on retained earnings, removal of SD on mobile usage, as well as on smartphones, and lastly to incentivise local manufacturer production limit to increase smartphone availability.