Lift all VAT, SD, surcharge on internet

FT ONLINE

Cell phone operators have called for exempting internet usage from all value added tax (VAT), supplementary duty (SD) and surcharge in the upcoming budget, noting that such move would help increase internet penetration in the country.

Exempting the internet usage from such taxation would help increase data penetration, which would ultimately help boost the national economy, they said during a pre-budget meeting with the National Board of Revenue (NBR) in the capital on Monday.

Without increased data penetration, the newly-introduced 4G service has no future in the country, they also opined.

"Sixteen years ago, the then government exempted computer import from all taxes and duty. Since then computer penetration has increased and ICT industry has boomed," said Shahed Alam, head of regulatory affairs of Robi, one of the top mobile operators.

"Similar benefits can also be achieved, if the government waives VAT, SD and surcharge on internet," he added.

Pointing out that unique internet penetration in Bangladesh currently stands at only 18 per cent, whereas in many developed countries it has already reached 140 per cent, the industry insiders observed that still there is huge scope for expansion of internet services in the country.

The mobile operators, during the meeting, also urged NBR to reduce import duty on 4G-enabled handsets for an interim period.

"Since 4G service is still in the process of adoption, reducing import duty on the 4G-enabled handsets would help increase its penetration in the country," said Mahtab Uddin Ahmed, vice president of the Association of Mobile Telecom Operators of Bangladesh (AMTOB).

"The impact of 4G would be huge, as hundreds of new startups can be brought up through the new types of services facilitated by 4G," opined Mr Mahtab, also the managing director and CEO of Robi.

Noting that the government is already providing tax incentives for locally-manufactured handsets, the mobile operators pointed out that it would take two more years before the local manufacturers can reach a certain stage.

"For this interim period, import duty on the 4G-enabled handsets should be reduced," the AMTOB vice president added.

Regarding the issues, NBR Chairman Md. Mosharraf Hossain Bhuiyan said the revenue board would further analyse the mobile operators' proposals.

Noting that currently a number of legal disputes between the cell-phone companies and the NBR are creating a backlog, Mr Bhuiyan also called for adopting Alternative Dispute Resolution (ADR) for solving such disagreements.

"Opting for ADR would save substantial time and cost that is usually involved in the legal process," the NBR chairman said.

Earlier, during the meeting, local ceramic manufacturers and exporters called for reducing import duty on the raw materials that are necessary for production of ceramic items as well as for increasing SD on imported foreign ceramic products.

"Most of the raw materials needed for production of ceramic items are imported from abroad. High import duty on the raw materials increases prices of the local products and also decreases our competitiveness," said Irafn Uddin, general secretary of Bangladesh Ceramic Manufacturers and Exporters Association.

Besides, the representatives of Bangladesh Beverage Manufacturers' Association at the meeting called for reducing SD on soft drinks from 25 per cent to 15 per cent.

"SD on soft drinks was increased from 15 per cent to 25 per cent back in 2014, which has proven to be a burden for the local soft drinks manufacturers," they said.

"However, reverting it to 15 per cent can enable us to invest a huge amount of money and would strengthen the foundation of this industry," they opined.