The National Board of Revenue (NBR) has urged businesses involved with mobile banking services to pay 10 per cent tax-at-source from the money earned as commissions, fees etc.
The request came as part of a guideline, issued Wednesday, on the collection of income tax-at-source from the booming mobile banking services.
The guideline, signed by income tax first secretary (policy) Md Abdur Rahman Khan FCMA, has specified each sector of mobile banking services for deduction of tax-at-source.
Talking to the FE Wednesday, Mr Khan said the seven-point guideline has been issued following confusions at the field-level tax offices and commercial banks over payment of the tax on the services.
"This has almost become an untapped sector for revenue collection due to lack of a clear guideline," he said.
The government's internal revenue collection may see a substantial growth with the proper collection of tax-at-source from mobile banking services, he added.
The guideline defined service charges as commission, fees, revenue share etc on which businesses have to pay 10 per cent tax-at-source.
According to the income tax ordinance, 1984, 52AA, the income tax authorities have to collect 10 per cent tax-at-source on charges of any type of services, except a few ones.
NBR found some banks were providing mobile banking services using their own technology and under the bilateral agreement with the mobile network operators (MNOs).
"Some banks are proving the service through their respective delivery agents using networks of MNOs, while some banks have signed separate agreements with technical service providers, telephone networking and service delivery agents to provide the services," the guideline observed.
In some cases, MNOs provide mobile networking services and also work as service delivery agents under bilateral agreement with the banks.
"Tax will be imposed on all such types of service charges collected by banks, MNOs or other companies," Mr Khan said.
In the guideline, the NBR said the government earns revenue from mobile banking services through banks and MNOs.
The NBR instructs all of the businesses involved with mobile banking operating system to pay 10 per cent tax-at-source or Tax Deducted at Source (TDS) on their income as service charges, commission, fees, revenue sharing etc.
Banks will deduct 10 per cent tax-at-source from the service charges payable to the MNOs, technical assistance providers, service delivery agents or non-government organisations (NGO) or persons.
Mobile network operators will also have to pay the tax on service charges in case of obtaining any types of services from the vendors.
In some cases, MNOs or technical assistance organisations spend money on behalf of banks under written agreement.
Tax-at-source will not be imposed if the respective banks reimburse the same amount of expenditure without making any profit or mark-up. However, MNOs or the technical support organisations should pay the charges to a third party.
In the guideline, the NBR excluded Software Development and Information Technology Enabled Services (ITES) from payment of the tax.
"ITES services to the banks or MNOs for software development is exempted from payment of tax-at-source until June 30, 2015," the guideline said.
The NBR found the mobile banking services had gained popularity with the economic growth of the country.
With the approval of Bangladesh Bank (BB), commercial banks have been providing the mobile banking services under different names including Bkash, Mcash, Easy Cash, Sure Cash, Mobile Banking, Mobile Money, One Cash (OK) etc.
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