Mobile operators demand tax reforms
Mobile phone operators in their budget proposals for the upcoming fiscal year have called after the federal government to streamline the telecom tax regime, saying the prevailing policies encumber them and stand in their way to contributing more to the economy.
The operators' contribution to the country's economy is 7 per cent now, but if proper tax reforms could be induced board, the rate will rise further, the Association of Mobile Telecom Operators of Bangladesh (AMTOB) said in the proposals emailed to the National Board of Revenue.
"Since the sector has already been going through multiple problems with respect to taxation, it is time to find solutions to them," said AMTOB President Mahtab Uddin Ahmed.
As the complete country is facing unprecedented challenges as a result of COVID-19 outbreak, the telecom sector has become the backbone of all types of communication, business and entertainment, he added.
In the proposals, the operators requested the federal government to abolish SIM tax, lower the organization tax, lift turnover tax and eradicate double taxation.
Mobile operators are paying Tk 200 tax per SIM, that they say is a significant barrier to taking telecom services to low-income people, according to an AMTOB statement issued yesterday.
"If the SIM tax is waived, cellular phone coverage will widen in the rural areas and it'll bring greater benefit to the national economy," it said.
The AMTOB needed decreasing their corporate tax from 45 % to 30 %, a rate currently applicable to others in Bangladesh.
The organization tax rate for mobile phone operators is 22 per cent in India, 30 % in Pakistan and Nepal, 28 per cent in Sri Lanka and 20 per cent in Afghanistan.
The minimum threshold of the turnover tax creates an enormous pressure on small carriers, which pay 2 % of their revenue regardless of whether they incur a loss or make a profit, the AMTOB said, adding that three lossmaking operators are paying this tax from the equity injected by shareholders.
"Decreasing the turnover and corporate taxes is a prerequisite for the sustainability of the industry."
The operators share 5.5 % of their gross earnings with the federal government, while contributing another 1 per cent to a "social obligation fund" of the regulator, the AMTOB said, stressing the necessity for eliminating double taxation.
It also urged the NBR to clarify the worthiness Added Tax and Supplementary Duty Act, 2012, that they say will not provide specific guidelines in relation to VAT exemption for regulatory agencies.
"The federal government agencies and regulators are not following a VAT regulations as they are demanding or collecting VAT without registration and are not issuing any VAT challan, which goes against the principle of the VAT law," the AMTOB said.
It is difficult to ascertain the results of COVID-19, but cellular phone services will face huge challenges soon if the regulatory, tax and VAT-related issues aren't addressed immediately, said AMTOB Secretary General SM Farhad.
"The coronavirus situation is negatively impacting the operators and wreaking havoc on the revenues. We request the federal government to consider our proposals in order that the industry might help the country with its full potential," he said.
