Mobile users have already started to feel the heat of the proposed budget for fiscal 2019-20, which proposed doubling the supplementary duty and higher turnover tax on operators, said experts and related bodies yesterday.
Finance Minister AHM Mustafa Kamal in his maiden budget presentation on June 13 called for hiking the supplementary duty to 10 percent from 5 percent, SIM tax from Tk 100 to Tk 200 and turnover tax for mobile operators to 2 percent from 0.75 percent at present.
The government is highlighting digitalisation but in the proposed budget of fiscal 2019-20 it has proposed higher taxes for using technology, said Mohiuddin Ahmed, president of Bangladesh Mobile Phone Consumer Association.
“The supplementary duty has already been passed on to the customers and we know the operators will get some other taxes and those will ultimately fall on the customers.”
Ahmed’s comment came in a roundtable styled “Proposed Budget: Reality in Telecom Sector” organised by the Telecom Reporters Network (TRNB) at the capital’s Best Western La Vinci Hotel.
After raising the supplementary duty the government will earn Tk 1,300 crore more, but it will come from the consumers’ pocket, said Shamim Jahangir, finance secretary to the TRNB.
The hike in SIM tax will hinder the growth of the industry and the increase in turnover tax would raise the cost of doing business and ultimately that will lead to poorer service quality, speakers said.
Mahtab Uddin Ahmed, chief executive officer and managing director of Robi, said the operator logged in profit in the first quarter of 2019 but the proposed tax measures — which will be the highest in the world — means the trend will not continue for the rest of the year.
At present, only one operator is seeing profits and the other three are bleeding. Additional taxes on them at this moment would be fatal.
“The policymakers need to look into the matter,” he said.
The government had tried to offer new mobile licences at least three times in the past but found no response though Bangladesh as a market is very lucrative thanks to its huge tech savvy youth population.
“The only challenge is the tax policy and regulation,” he added. The budget goes against the foreign investment protection act, said TIM Nurul Kabir, the former secretary general of the Association of Mobile Telecom Operators of Bangladesh.
“The policymakers, especially the National Board of Revenue, need to study why foreign companies are leaving Bangladesh. We think we have a serious problem on financial regulation.” Increasing the supplementary duty is a crime when the government is encouraging digital lifestyle and wants to expand the service to the remotest corners, Kabir added.
Meftha Uddin Khan, member of the NBR’s Tax Survey & Inspection department, said this year they are getting huge reactions from different levels, especially from the digital segment.
Md Saiful Islam, an additional secretary to the telecommunication division, said they have already got feedback from different stakeholders, which they passed on to the finance minister. Hossain Sadat, director and head of regulatory affairs at Grameenphone; Sarwar Hossain Khan, head of tax at Banglalink; and Md Saifur Rahman, a deputy general manager of Teletalk, also spoke on the occasion.