The use of mobile phones is going to be more expensive due to a 5 per cent increase in supplementary duty on phone usage in the proposed budget for 2024-2025.
The proposed budget also includes a Tk 100 increase in SIM tax, rising from Tk 200 to Tk 300.
However, the proposed budget offers some positive aspects, including the continuation of tax benefits for the industry.
Finance Minister AHM Mahmood Ali proposed a 5.0 per cent supplementary duty on mobile phone recharge, bringing the total VAT on talk time and internet services to 20 per cent from the previous 15 per cent.
"I propose a 20 percent supplementary duty only on the SIM/RUIM card enabled mobile telecom service (Service Code S012.10) instead of the existing 15 percent," according to the budget speech.
This increase will be applied at the time of mobile phone recharge, raising the cost of mobile phone calls and internet usage for all users.
The Association of Mobile Telecom Operators of Bangladesh (AMTOB), in a statement, said that the government's decision to increase an additional 5 per cent supplementary duty on mobile services will further burden the telecom industry and mobile subscribers in the country.
"This increase will raise the cost of voice and internet services, putting financial pressure on users, particularly those from marginalised communities, and potentially leading to decreased mobile service usage," the statement said.
It further said that this reduction in usage will negatively impact businesses and reduce government revenue.
AMTOB also mentioned that the higher VAT on SIM cards will discourage new users, slowing the growth of mobile connections in a country where 45 per cent of people are still unconnected.
"These measures will slow down the overall digitisation of the country, impacting GDP growth and contradicting the Smart Bangladesh Vision of the Government. We urge the government to reconsider these duties and consider our earlier telecom budget recommendations," it added.
The budget also proposed an increase in SIM tax by Tk 100 for each SIM.
"I propose to set TK 300 as Value Added Tax (VAT) for the supply of each SIM/e SIM card instead of the existing VAT amount of TK 200," said the finance minister.
However, mobile handset manufacturers and assemblers have welcomed the proposed budget as it continues tax benefits for the industry.
"I propose to extend the tenure of notification no. SRO-229-Ain-/2019/65-VAT, dated: 30/06/2019 by one year, until June 30, 2025, regarding concessional facilities for local manufacturing and assembling of mobile telephone sets or cellular phones," said the finance minister in his budget speech.
The proposed budget also includes new components in the tax benefits facility for the manufacturing and assembling of mobile telephone sets or cellular phones industry.
The amendment of the baggage rule for importing handsets has also been positive for the industry, as now only one phone can be brought from abroad per person.
"I propose amending the rules to allow two used mobile phones without payment of duties and taxes and one new mobile phone with payment of all applicable duties and taxes," said the finance minister.
Under the existing baggage rule, subject to the provision of section 3(5), a passenger can bring two mobile phones without payment of duties and taxes.
Rizwanul Haque, vice-president of the Mobile Phone Industry Owners' Association of Bangladesh (MPIOAB), told The Financial Express that all of these decisions will have a positive impact on the industry.
He mentioned that the amendment of baggage rules will help curb the grey market.
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