Budget FY22: Increasing taxes on mobile financial service providers proposed

Finance Minister AHM Mustafa Kamal has proposed a 37.5% tax for publicly traded providers of mobile financial service (MFS) in the proposed national budget for 2021-22 fiscal year, raising it from the existing 32.5%.

In addition, a 40% tax has been proposed for non-publicly traded MFS providers, increasing it from 32.5%.

"Financial inclusion, formalization of the economy and expansion of the tax net are of utmost importance to the national economy," the minister said while presenting the proposed national budget for 2021-22 fiscal year on Thursday afternoon.

The finance minister proposed to include MFS as a means of payment along with bank transfer, where making payments through bank transfer is a mandatory provision, and to make payments through crossed cheque, bank transfer or MFS mandatory where payments exceed Tk50,000.

The minister has also proposed to make the rate of tax deduction 50% higher than the applicable rate, where the bills are not received through banking channels or MFS by suppliers and contractors.

He further proposed to make having tax identification number (TIN) a mandatory provision in cases of obtaining approval of a plan for a building, obtaining registration for a cooperative society, for purchasing saving certificates exceeding Tk200,000, and opening a postal savings account exceeding Tk200,000.

He also proposed to define the e-commerce platform as a source tax deducting authority.

"If these proposals are endorsed by this House, the size of the formal economy of the country will get bigger, and investment and revenue collection will increase, by allowing transactions through MFS," the finance minister said.

"Along with bank transfer, this modern technology is provided with a legal basis. This will ensure a business-friendly environment," he added.