Improve service to get tax benefit
Cellular phone operators should focus more on bettering the caliber of service to get tax exemption, said Posts and Telecommunications Minister Mustafa Jabbar yesterday.
Citing call drop, low internet speed and having less network coverage, he said the Bangladesh Telecommunication Regulatory Commission (BTRC) regularly received a large number of complaints against mobile phone operators about their poor service.
He asked the operators to be proactive in enhancing the standard of service taking into consideration the interests of consumers.
The minister said the telecom ministry might submit a proposal to the federal government to exempt the SIM tax of Tk 200 if the operators could prove that that they had improved the standard of the service and persons received the power.
"We will propose to the government to withdraw the SIM tax in the next budget," said the minister, while speaking at the virtual launch of the GSMA's Bangladesh Mobile Industry Tax Study.
Salman F Rahman, the adviser to the prime minister on private industry and investment, said the government might consider the tax exemption if mobile operators could ensure consumers' comfort.
The telecom sector may be the foundation of the digital economy, but unfortunately, the taxation regime undermines its contribution to the economy, said Mahtab Uddin Ahmed, president of the Association of Mobile Telecom Operators of Bangladesh (AMTOB).
"Telecom pays more than its fair share of tax in comparison to other industries including tobacco, constraining investment capacity to build the digital infrastructure," he said.
"Taking into consideration the socio-economic contribution of the mobile sector, we urge the federal government to facilitate an investment-friendly taxation regime and enable us to accelerate the digital transformation journey."
In a press release, Julian Gorman, head of Asia Pacific for the GSMA, a worldwide telecoms association representing more than 750 operators, said: "Bangladesh's digital vision reaches real risk lacking any internationally competitive industry tax policy."
Probably the most strategic policy instruments Bangladesh can wield to accelerate the financial recovery and close the digital divide is to reduce the 44 % tax burden - the 3rd highest in the world - on the mobile telecommunications sector, based on the research published by the GSMA.
Almost half of every Tk 100 in earnings for mobile network operators is paid to the federal government in taxes and regulatory service fees - almost twice the common of the Asia-Pacific region. And Bangladesh's economy and population pay the purchase price in many ways, the news release said.
The GSMA study showed that the mobile tax contribution is 4.two times its industry size in the economy, indicating that tax policy has ignored the significant positive externalities of the sector.
To redress the imbalance, the GSMA recommended that mobile sector taxation levels be aligned with all of those other economy.
The minimum turnover tax should be reduced to 0.5 % from the existing 2 %. The GSMA estimates that reduction would increase GDP by $476 million with an gross annual gain in tax earnings of $47 million after five years.
The corporate tax rate ought to be reduced for non-public companies to 40 per cent from the current 45 %, and simultaneously for public mobile operators to 35 % from 40 per cent. This reduction would add $131 million to GDP while increasing tax earnings by $14 million annually after five years, the press release said.
Posts and Telecoms Secretary Md Afzal Hossain and BTRC Chairman Shyam Sunder Siker also spoke at the webinar.
