Mobile phone operators in their budget proposals for the upcoming fiscal year have called upon the government to streamline the telecom tax regime, saying the existing 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 can be brought on 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 is already going through multiple issues regarding taxation, it's time to find solutions to them," said AMTOB President Mahtab Uddin Ahmed.
As the whole country is facing unprecedented challenges due to the COVID-19 outbreak, the telecom sector has become the backbone of all sorts of communication, business and entertainment, he added.
In the proposals, the operators requested the government to abolish SIM tax, bring down the corporate tax, lift turnover tax and eliminate double taxation.
Mobile operators are currently paying Tk 200 tax per SIM, which they say is a major barrier to taking telecom services to low-income people, according to an AMTOB statement issued yesterday.
"If the SIM tax is waived, mobile phone coverage will widen in the rural areas and it will bring greater benefit to the national economy," it said.
The AMTOB called for bringing down their corporate tax from 45 per cent to 30 per cent, a rate currently applicable to other companies in Bangladesh.
The corporate tax rate for mobile phone operators is 22 per cent in India, 30 per cent in Pakistan and Nepal, 28 per cent in Sri Lanka and 20 per cent in Afghanistan.
The minimum threshold of the turnover tax creates a huge pressure on small carriers, which pay 2 per cent 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.
"Bringing down the turnover and corporate taxes is a prerequisite for the sustainability of the industry."
The operators share 5.5 per cent of their gross revenue with the government, while contributing another 1 per cent to a "social obligation fund" of the regulator, the AMTOB said, stressing the need for eliminating double taxation.
It also urged the NBR to clarify the Value Added Tax and Supplementary Duty Act, 2012, which they say does not provide specific guidelines with regards to VAT exemption for regulatory agencies.
"The government agencies and regulators are not following the 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 consequences of COVID-19, but mobile phone services will face huge challenges soon if the regulatory, tax and VAT-related issues are not addressed immediately, said AMTOB Secretary General SM Farhad.
"The coronavirus situation is negatively impacting the operators and wreaking havoc on their revenues. We request the government to consider our proposals so that the industry can help the country with its full potential," he said.
Source: https://www.thedailystar.net/business/news/mobile-operators-demand-tax-reforms-1900543