Robi CEO: Why is tobacco taxed less than telecom?

Mahtab Uddin Ahmed, managing director and chief executive officer of Robi Axiata, raised questions as to why mobile operators still had to pay higher income tax on their annual sales, more than tobacco.

Speaking at a virtual press conference on Robi's pre-budget proposals for the fiscal year 2021-2022 on Wednesday, he also said that liquor sellers had to pay 0.6%, coal-based power plants 0.5-0.8% and tobacco manufacturers 1%, still much lower than telecom companies.

Even if the mobile operators incur losses, the 2% is mandatory. But it is charged more than both alcohol and tobacco, which are harmful to health, as well as coal power plants, which are harmful to the environment, said the Robi CEO.

“On the contrary, the telecom industry is taking the country's economy forward. It seems that investors made a wrong decision to invest here that their minimum tax would be higher than alcohol or tobacco,” Mahtab lamented.

During the press conference, he also revealed that due to burdening tax and duty, Robi's actual corporate tax rate stood at 89%. If Robi makes a profit of Tk100, they have to pay Tk89 to the government as income tax.

In 2020, Robi made revenue of Tk7,564 crore. Of this, Tk4,236 crore goes to the government coffer, about 56% of the total revenue. Robi paid this amount as various types of taxes, fees, and frequency leases. After investing a mammoth amount of money, Robi's profit was only Tk155 crore in 2020,” said Mahtab.

But his primary frustration lay with the 2% income tax on annual total sales price, which the government had implemented in the 2019-20 budget.

Operators have to pay this income tax on the amount of money they earn by selling services. In this case, profit and loss will not be considered.

“This tax does not affect Grameenphone due to its high revenue volume, but affects Robi, Banglalink, and Teletalk adversely,” Mahtab claimed.

“We are not demanding something special. We want fairness in taxation policies. It is unconstitutional to pay tax even if we incur losses. Policymakers know and understand this. But nothing is happening.”

The Robi CEO also said that they were not getting any additional benefits even after being registered in the stock markets.

“Tk500 crore is not such a big deal for Axiata. We went to the capital market based on the assurances of those concerned but their assurances are not being fulfilled yet. Foreign investors are also watching what is happening with Robi,” he also said.

Foreign mobile operators in Bangladesh have to pay the highest tax rate among other countries. Few countries have minimum taxes, but they are adjustable, he mentioned.

Shahed Alam, chief corporate and regulatory officer of Robi, said that now they have to pay income tax from their pockets due to the minimum tax.

The corporate tax on ordinary companies in the country is 32.5%. However, if it is listed in the capital market, it is 25%.

Corporate tax for mobile operators is 45%. Mobile operators registered with the capital markets pay 40% as the corporate tax.

However, there are some big discounts in some special sectors such as the corporate tax in the garment sector is only 12%.

Recently, traders have been objecting to tax collection even if the company is at loss. In addition to the minimum tax, the government also levies income tax at the source.

Businesses want income tax to be adjusted after profit and loss.

However, there are allegations that the recovered money is not refunded even after the loss. In addition, many have objections to the corporate tax rate.