Telcos seek corporate tax cuts

June 09, 2021 Business
Telecom operators yesterday placed a slew of demands before the authorities, including slashing corporate tax from 40 % and 45 % to 25 % and 32.5 % for listed and non-listed entities respectively. 

"Corporate tax for cellular operators is too much which should be brought down to a rational level," explained SM Farhad, secretary general of the Association of Mobile Telecom Operators of Bangladesh (Amtob), at a post-budget press conference.

"Mobile network operators are suffocating due to great taxation. Without rationalisation of taxation, this sector will never be able to contribute to its full potential," he added.
In line with the Amtob, corporate taxes is 29 per cent in Pakistan, 28 % in Sri Lanka, 30 % in Nepal, 25 per cent in Myanmar.

The operators' also demanded withdrawal or rationalisation of the minimum 2 % turnover tax imposed on unprofitable carriers and withdrawal of supplementary duty and surcharge from direct operator billing.

They sought amortisation facilities on all intangible assets and abolishment of a Tk 200 tax on mobile SIM purchases.

They also want the government to reduce the prevailing 33.25 % and 21.75 % VAT, SD, and surcharge over Tk 100 talk time and Tk 100 internet use respectively to an acceptable level.

"While mobile market earnings accounted for 1.1 % of the country's GDP in 2019, the sector's tax and cost payments accounted for about 4.4 % of total government tax revenue," said Farhad.

"This signifies that the mobile taxes contribution is 4.two times its size in the economy," he said.

He said despite the expansion of mobile phone coverage, about 50 % of Bangladesh's population (46 % unique-subscriber penetration) remains to be to be connected to the mobile phone network. Reforming cellular taxation is therefore key to accelerating digital inclusion, he said.

"According to the Overseas Telecommunication Union, a 10 % increase in cellular broadband penetration would yield 2.43 per cent increase in GDP per capita in the developing countries. Therefore, the federal government can easily catalyse GDP growth by reducing the taxation composition," he said.

Taimur Rahman, chief corporate and regulatory affairs officer at Banglalink, said, "We are disappointed to see our reasonable demand for a good few revisions is not addressed in the announced price range."

"If these tax rates will be reduced significantly, our traders will feel extra encouraged to purchase this telecom market, that is a good sign from the FDI perspective aswell," he said.

Hossain Sadat, director and brain of consumer and regulatory affairs, Grameenphone, said rationalising the taxation systems would accelerate the digital journey as the telecom sector has been considered a crisis service during the pandemic.

Shahed Alam, chief corporate and regulatory officer at Robi, said, "Despite making our demands predicated on thorough analysis, we, as a business, are continuing to obtain deprived from the budget every year."

"We would urge the government to undertake a thorough study on the taxation composition for the industry, in order that we can have a wholesome dialogue and reach decisions that may truly unlock the digital potential of the country," he said.

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