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ICT trade-bodies' reaction

Budget at odds with 'Smart Bangladesh'

They urge extending tax exemption for ICT industry until 2030

FE REPORT | June 05, 2023 00:00:00

Terming the budget inconsistent with the aim of achieving 'Smart Bangladesh', business leaders of the ICT sector urged Prime Minister Sheikh Hasina to withdraw the 5.0 per cent VAT on the software sector, proposed in the budget.

Urging to extend the tax exemption facility for the ICT industry until 2030, they also said the announced budget for the fiscal year (FY) 2023-24 did not reflect the proposals of the information and communication technology (ICT) sector as expected.

The leaders of the ICT sector trade-bodies said these in a press conference on post-budget reactions at BASIS Auditorium in Dhaka on Sunday.

Bangladesh Association of Software and Information Services (BASIS), Bangladesh Computer Samity (BCS), Bangladesh Association of Contact Centre and Outsourcing (BACCO), Internet Service Providers Association of Bangladesh (ISPAB), and E-Commerce Association of Bangladesh (E-CAB) jointly organised the press conference.

Speaking at the press conference, BASIS President Russell T. Ahmed said import duty on operating systems, databases and security software has been increased from 5.0 per cent to 25 per cent, while 5.0 per cent VAT on software has been proposed, which are incompatible with the goal of 'Smart Bangladesh'.

He earlier proposed extending corporate tax exemption period for the sector till 2030, withdrawing VAT on software and ITES, and increasing cash incentive from 10 per cent to 20 per cent against export of software and IT services.

However, none of these was taken into account in the proposed budget, the BASIS president opined.

Increasing import duty and imposing VAT on software would increase software prices, which is inconsistent with implementing the vision of 'Smart Bangladesh', he added.

BACCO President Wahid Sharif, ISPAB President Md Imdadul Hoque, and E-CAB Vice President Mohammad Shahabuddin, among others, were also present in the event. They gave their budget reactions on behalf of their respective associations.

Expressing disappointment over the imposed tax and tariff in the proposed budget, the BCS representative said the total tariff now stands at 26 per cent as a result of imposing 15 per cent duty on import of laptops, FMC printers and toner cartridges in FY 23. It was proposed to be withdrawn, but remains the same this year.

It would completely undermine the goal to build a 'Smart Bangladesh', he added.

Mr. Wahid Sharif said international buyers get BPO services from Bangladesh at relatively low prices. So, Bangladesh is currently in an important position in the international ICT market.

Many contact centre software are not yet developed in the country, which have to be imported from outside. But the operating system, database, security software and other software are subject to 25 per cent import duty along with 15 per cent VAT, he explained.

As a result, the cost of services in this industry would increase, and it would havea negative impact on the international market, he added.

Mr. Md. Imdadul Hoque said despite the Prime Minister's directives in the proposed budget, all services of the internet service providers (ISPs) were not included in information technology enabled services (ITES).

There is no duty reduction on the materials used in the IT sector, and no withdrawal of 10 per cent advance tax on broadband ISPs and expansion of internet services, he added.

Mr Mohammad Shahabuddin expressed his thanks to the Prime Minister for recognising the e-commerce marketplace.

He said this time the definition of 'market place' has been included in the proposed budget, which is an outcome of the efforts of E-CAB for the last three-four years.

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