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Demand to withdraw new VAT on mobile service operators

  • Published at 03:40 pm June 17th, 2019
Demand to withdraw new VAT on mobile service operators
Mohiuddin Ahmed, president of President of Mobile Phone Consumer Association, briefs the media during a conference at Dhaka Reporters Unity premises on Monday, June 17, 2019 Rajib Dhar/Dhaka Tribune

According to the new budget, imposition of 1.25% VAT on the existing 0.75%, totals to 2%, while the supplementary duty has been increased to 10% from 5%

Bangladesh Mobile Phone Consumer Association on Monday demanded the withdrawal of newly imposed VAT on mobile phone operators.

The newly imposed VAT on mobile phone operators will not only increase the call rates but also affects the process of digitalization, it said at a press conference arranged at Dhaka Reporters Unity (DRU) in the city.

The association claimed that increased VAT, surcharge, and supplementary charge (SD) will ultimately increase the monthly expense for a mobile phone user.

According to the new budget, imposition of 1.25% VAT on the existing 0.75%, totals to 2%, while the supplementary duty has been increased to 10% from 5%.

The subscribers have to pay 15 % VAT and 1% surcharge for phone calls, and other usage. They also have to pay 7.5 percent VAT for data usage.

Experts, Association of Mobile Telecom Operators of Bangladesh (AMTOB), and consumers right platforms said such a move will directly create an impact on about 10 crore subscribers.

President of Mobile Phone Consumer Association, Mohiuddin Ahmed said the government will earn Tk2,500 crore from SD, but the actual tax on mobile phone usage will stand at 22.77%, that means a subscriber will get the service of Tk78.27 for every Tk100 recharge, he added.

A subscriber has to spend an average of Tk150 per month for each SIM connection. The new tax will add another Tk15 to Tk20 to his expenditure. Besides, the new VAT on new SIM card will cost new customers Tk200. This extra tax will add around Tk250 crore to the government exchequer.

In 2017-18, VAT on mobile phone import was brought to 15% by giving some advantages to local operators. In 2018-2019, a supplementary duty was imposed on mobile phone imports.

As a result, the average cost per smartphone was increased from Tk1,000 to Tk3,000, by which local produces were benefited to some extent, but the country could not get any skilled manpower or mobile technicians that might have helped it economically, Mohiuddin said.

Further, the subscribers have to pay a partial amount to the mid-level service providers like – NTTN, ICX, IGW, and MNP.

“The tax has been increased in a way that around 56% of the money paid by the subscriber goes to the government exchequer, whereas the percentage was 47% last year,” Mohiuddin said quoting their estimates.  

He urged the government to withdraw the newly imposed VAT for the benefit of the users, if not by Tuesday, the association would approach the court seeking help for safeguarding the subscribers’ right. If necessary they will take to road to realize their demand.    

Zonayed Saki, Chief Coordinator of Ganasanghati Andolon said this budget lacks innovative ideas to find newer sources of collecting taxes.

A large number of unemployed youths manage their day to day expenses by ride sharing drives like Uber, Pathao, and Obhai, for which they have to use mobile phones. This flourishing sector will be at a critical state following the newly imposed taxes.

Chairman of Poribesh Bachao Andolon (Poba) Abu Naser Khan said the newly imposed VAT has been designed in a way so that the mobile operators would pay their taxes from their own revenue, and not by increasing calls and other service rates. “It is government’s duty to ensure that the rate does not go up,” he added.

Mohiuddin, who presided over the program, said following a writ by the association in December last year, the High Court had put a stay order on increasing call rates.

“It is unethical, unjustified, and illegal to increase minimum call rate without solving the problem. The operators must not increase the call rates before any decision by the court. It's government decision, how they would manage the VAT problem till the decision comes. ”

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