High taxes on telecom sector to lower growth: businesses

High taxes on the telecommunication sector are contradictory to the government’s telecommunication policy and would ultimately result in revenue losses of the government from the sector, said telecom sector businesses at a discussion on Wednesday.
They said mobile phone users had already started witnessing the fallout of the proposed hike in supplementary duty and it would also push to increase the cost of digital services.
They made the observations at the discussion titled ‘Proposed Budget: Reality in Telecommunication Sector’ organised by Telecom Reporters’ Network Bangladesh (TRNB) in a city hotel.
The government in the proposed budget for the fiscal year of 2019-20 has increased supplementary duty on mobile phone usage to 10 per cent from 5 per cent, SIM tax to Tk 200 from Tk 100, turnover tax on mobile phone operators to 2 per cent from 0.75 per cent and 15 per cent tax on retained earnings and reserve of listed companies including Grameenphone.
Bangladesh Mobile Phone Consumers Association president Mohiuddin Ahmed said the government had prioritised digitisation but in the proposed budget it had imposed additional taxes on the telecom sector.
‘Already the burden of the supplementary duty has been passed to the customers and we know some other taxes are waiting for the MNOs, which also ultimately to be collected from the customers,’ said Mohiuddin.
Robi chief executive officer and managing director Mahtab Uddin Ahmed said that the telecom sector was the only area where the businesses had to pay taxes to two regulatory bodies.
The government on several occasions after 2010 has initiated to issue fresh licence to new mobile phone operator but the initiative was in vain due to the high taxes on the sector, he said. Mahtab said that they had logged profits in the first quarter but the proposed tax measures would not allow them to continue making profits.
‘Even if the operator had managed to make Tk 100 crore in profits in the year 2019, it would incur Tk 50 crore in losses due to the imposition of turnover tax as it will have to pay additional Tk 150 crore to the government as the new tax,’ he said.
The Robi CEO said only one out of the four operators in the market was profit-making and that was why the policymakers needed to look into the matter of additional taxes.
Former Association of Mobile Telecom Operators of Bangladesh secretary general TIM Nurul Kabir said the proposed budget went against the foreign investment protection law.
‘Policymakers, especially the NBR need to look into the matter why foreign companies are leaving Bangladesh and we think we have a serious problem in the area of financial regulation,’ Kabir said.
National Board of Revenue member Meftha Uddin Khan said this year they were getting huge budget reaction from different quarters especially from the digital segment.
Posts and Telecommunications Division additional secretary Md Saiful Islam said they had already got feedbacks from different stakeholders and would place those before the Finance Division.
Grameenphone regulatory affairs head Hossain Sadat, Banglalink tax head Sarwar Hossain Khan and Teletalk deputy general manager Md Saifur Rahman also spoke on the occasion.



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