Budget FY22: Telecom operators feel left out

Mobile network operators have expressed their dissatisfaction over the lack of any incentives or tax cuts in the national budget proposed for 2021-22 fiscal year on Thursday.

The fact that tax rates remained unchanged irked them to no end, as they had appealed earnestly for rationalizing the existing tax rates, which is the among the highest in Bangladesh.

They opined that reducing taxes for the telecom sector would have helped expedite Bangladesh's digital transformation.

The sector is already heavily taxed and in dire need of tax reduction in some areas, including minimum tax, corporate tax, SIM tax and duty on direct operator billing. 

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The Association of Mobile Telecom Operators of Bangladesh (Amtob) expressed the displeasure over the proposed budget in an immediate reaction on Thursday.

Amid the Covid-19 pandemic, the telecommunication sector has been declared an emergency sector and continues to contribute significantly in terms of connecting people to run businesses as well as keeping the economy running.

The sector also aims to connect the remaining unconnected people.

The mobile network operators urged the government to redirect their attention to the telecommunication sector and address key issues to continue support to the digital society.

Operators said issues including minimum tax, corporate tax, SIM tax, and direct operator billing should have been addressed in this budget.

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Their demands include a reduction in corporate tax on unlisted and listed operators to 32.5% and 25%, respectively, from the existing rate of 45% and 40%, abolishing Tk200 SIM tax, and withdrawal or rationalization of the minimum 2% turnover tax imposed on the carriers.

Withdrawal of supplementary duty and surcharge from direct operator billing, providing amortization facilities on all intangible assets and clear guidelines for value added tax (VAT) exemption for government agencies and rationalizing interest on unpaid VAT were also on the list of operators' budget proposals.

"Unfortunately, the telecom sector will not be able to contribute to its fullest potential, since the sector does not have anything for itself to cheer about," said Shahed Alam, chief corporate and regulatory officer of Robi, a mobile phone operator.

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Banglalink declined to comment on this issue, adding that Amtob will speak on their behalf.

Amtob Secretary General Brig Gen (retd) SM Farhad said: "We are working to bring the latest technology like 5G and also keen to invest further. But the current regime will impede the growth of Digital Bangladesh and discourage FDI [foreign direct investment]."

It is important to reconcile the contribution of the mobile telecommunication sector with the overall economy and the existing tax system, he added.

Amtob President Mahtab Uddin Ahmad also expressed his concern and said that the industry would continue to struggle in the coming years, resulting in slower digitalization drive at a time when Bangladesh needed to accelerate it.