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OP-ED: Taxation on mobile devices and Digital Bangladesh

  • Published at 01:26 am January 5th, 2021
The true impact of tax havens

Why common digital devices are getting more expensive in Bangladesh

The number of mobile phone users has grown in huge numbers in recent years, creating a positive impact on the formation of Digital Bangladesh. The statistics from BTRC Mobile Phone subscribers reached 159.780 million in march 2019.

The government’s Digital Bangladesh by 2021 vision offers to use ICT in every sector to ensure social security, quality education, healthcare, and law enforcement for all. Because general citizens most widely use the mobile phone to access ICT-related services, it should be cheaper and more easily accessible. However, instead of getting cheaper, it is getting more expensive day by day because of the insane amount of import and sales tax on mobile phones and other ICT-related products.

Because of the last installment of increased tax rates on smartphones in June 2020, the consumer has to pay a total of 57% of the tax on imported smartphones. And because most of the smartphones from renowned brands are imported, customers do not have a choice but to pay 57% of the tax on every smartphone purchase they make.

Also, cell phone clients should cover higher tabs as the valuable obligation is set to increment to 15% from the current 10% in the proposed financial plan for the fiscal year 2020-21. So, the cost of using mobile phones is also increasing because of the higher tax rate. With the new tax proportion, clients have to pay a 33.25% tax to public authorities for cell phone use.

As mentioned before, mobile phones are the most widely used technology in the country right now. From business to education, it plays a vital role in every sector. In this pandemic, education has moved on to online-based systems. 

Because of that, mobile phones should not be treated like luxury products with high tax rates. The tax rate is a vital cost component, especially in a developing country like Bangladesh.

Hence, the amount of tax at the expense of mobile phone possession is the primary component to deciding the mobile phone infiltration rate. The development of the cell phone infiltration rate relies upon the cost of the mobile device and the customer’s subscription charge. Because of a high rate of taxes, the price of mobile phones in the market has increased, which led to lower demand. A huge number of users cannot afford a mobile phone if the price keeps increasing like this.

If new users can’t access mobile phones just because of high prices which are created intentionally with high tax rates, there will be a really difficult time up ahead in ensuring ICT services to every class of citizen. In a developing country like Bangladesh, the tax rate might lead to the decision of whether a person with limited income can afford a mobile phone or not. Because the world is moving towards the digital world, it would create a crisis for people in Bangladesh to cope up with the world if not everyone can afford a digital device in Digital Bangladesh.

The government might show that to promote local digital device manufacturing plants, the extra tax implication is necessary on the imported devices. But local manufacturers still have not reached the capability to fulfill the demand of mobile phones -- not yet, at least.

Almost 20% of mobile phones still need to be imported. When converted by the number, it amounts to more than a million devices that need to be imported. 

Also, it’s not possible to manufacture every brand of mobile phone locally. There is also the question about the quality of a locally made smartphone: Are they able to maintain the same quality as imported ones? 

So, the consumer should have the choice of which device they want to buy without paying extra for the same product.

Finally, the high tax rate on mobile devices should be reconsidered because of the necessity of this in Digital Bangladesh. If the government decides to not reduce taxes on mobile devices, it will be unfavourable to unlocking the possibilities of Digital Bangladesh. It will be favourable for Digital Bangladesh if the government rethinks recreating a taxation policy which will be focused on the consumers’ interest and also help increase the mobile market and penetration rate to new consumers.

SM Asif Mahmud is a student of law.

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