A 40% tax has been proposed for non-listed MFS providers, increasing it from 32.5%
The proposed corporate tax hike on mobile financial services (MFS) is not logical at this moment and could interrupt the growth of the sector, say industry insiders.
Finance Minister AHM Mustafa Kamal on June 3 proposed a 37.5% tax for publicly listed MFS providers in the national budget for 2021-22 fiscal year, raising it from the existing 32.5%.
In addition, a 40% tax has been proposed for non-listed MFS providers, increasing it from 32.5%.
MFS providers will have to pay the higher corporate tax in the next fiscal year if they make profits, but till now, most of the providers in the sector have yet to make profits.
It is not right to compare us with banks because they collect deposits and their business is big, said a senior official of bKash, seeking anonymity.
“The MFS industry is growing everyday and now we have to invest in technology, so it is not the right time to hike tax in the growing industry,” added the official of bKash — a leading MFS provider in the market.
If the proposed tax hike is implemented, it would not impact the consumers now but in the long run, it may negatively impact foreign investment in the sector and the digitalization of the sector, said Tanvir A Mishuk, managing director of Nagad — another leading MFS provider operating under the authority of Bangladesh Post Office.
“We think it will be difficult to achieve the overall goal of digitalization if we do not digitize the financial sector,” he further said.
The MFS industry plays an important role in increasing financial inclusion in the country and establishing a cashless society, he added.
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As per central bank data, 15 operators backed by banks are licenced to provide mobile financial services in Bangladesh.
Of the MFS operators, bKash of Brac Bank is the most active and the largest MFS operator.
The licencing issue of the MFS operator Nagad, a service of Bangladesh Post Office and considered as the country’s second largest operator, is currently under Bangladesh Bank’s consideration.
Apart from these two, Dutch-Bangla Bank’s Rocket, Mercantile Bank’s MYCash and Islami Bank Bangladesh’s mCash are the major market players in the MFS market, among others.