The Financial Express

Guarantee of public benefit sought for tax cut for telecom operators

| Updated: May 08, 2021 18:47:37

File photo used for representational purpose File photo used for representational purpose

The government's top brass wants guarantee from telecoms operators that the people of the republic benefit from the tax rate if reduced.

It is true that tax rate on telecommunications is high and the rate should be revised, they said during a virtual roundtable on Thursday.

Speaking as the chief guest, post and telecommunications minister Mustafa Jabbar said, "I hope the National Board of Revenue reconsiders the issue and should justify tax rates on telecommunications."

Mr Jabbar said he received thousands of complaints against operators about poor services.

The prices of bandwidth have come down from Tk 27,000 to Tk 285 per unit in the past 12 years.

"But benefits have not given to the people who are using the facilities," the minister mentioned.

Pointing to telecoms carriers, he said, "You have to pass the benefit of the government to the people."

SIM (subscriber identity module) tax should not be there at all, he observed.

PM's private industry and investment adviser Salman Fazlur Rahman said the revenue growth of telecoms operators should be above inflation.

"If the corporate tax rate and the minimum turnover tax are reviewed, there must be a guarantee that operators continue investment and pass on the tax benefit to customers," he said.

BTRC chairman Shyam Sunder Sikder believes tax rates on telecommunications is justified.

"If they (telcos) find other sectors are less taxed but more profitable, they can switch their business to there," he observed.

NBR member Pradyut Kumar Sarkar clarified that tobacco companies were paying highest taxes while some ICT companies were getting tax exemptions.

Mentioning that the NBR follows the 'Super Taxation Concept' for telcos, he, however, finds the argument of the cellular companies rationale.

A GSMA report was presented during the webinar co-hosted by GSMA, a global platform of telecoms operators, and Association of Mobile Telecom Operators of Bangladesh (AMTOB).

High taxes on the country's telecoms sector lower its capacity to invest for the development of the ecosystem, according to the report.

One of the most strategic policy instruments Bangladesh can wield to accelerate economic recovery and close digital divide is to reduce the 44-per cent tax burden-the third highest globally-on the mobile telecoms sector, it stated.

The GSMA report styled 'Accelerating Digital Transformation in Bangladesh: Recommendations for Mobile-sector Taxation Reform' said operators in 2019 paid Tk 119 billion in taxes, representing 44 per cent of the total mobile-sector revenue.

The tax collection rate from operators is 26 per cent in sub-Saharan Africa, 24 per cent in Middle East and North Africa, 24 per cent in Asia Pacific, 21 per cent in Europe and 18 per cent in Latin America.

AMTOB president and Robi Axiata managing director and CEO Mahtab Uddin Ahmed said, "The telecoms sector is not asking for any stimulus package, special rebate, rescue package, discount."

"All we are asking is fairness and rationality in our taxation, all we are begging not to kill the golden goose," he added.

Mr Ahmed said the NBR understands the issue properly but they do not address it for unknown reasons.

A task force could be established to do a proper study on the taxation situation in Bangladesh and follow its recommendations afterwards, he opined.

Among the 24 countries where Robi's parent company has operations, the taxation rate in Bangladesh is the highest, he said, adding that the operator has paid 73-per cent tax on its profit.

About the high taxation issue in the sector, Banglalink CEO Erik Aas said high taxation was hindering growth of mobile phone companies.

The tax rate should be at a level so that telecoms companies get the scope to grow, he observed. Before the pandemic, Mr Aas said, the growth rate was 4.0-5.0 per cent but the rate has come down to around 1.5 per cent during Covid-19.

AMTOB representing vice-president Jens Becker said the taxation policy suggests that the government considers the mobile sector as luxury goods although telecoms operators are playing a significant role on the socio-economic perspective.

The sector is playing its part in developing the backbone of digitisation.

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