The National Board of Revenue (NBR) has cut VAT on internet related value chain services to 5.0 per cent in response to the demands of the internet service providers and recommendations of the policymakers.
From now on, the value added tax (VAT) on International Terrestrial Cable (ITC), International Internet Gateway (IIG) and National Telecommunication Transmission Network (NTTN) services will be levied at 5.0 per cent instead of earlier 15 per cent.
The NBR issued a Statuary Regulatory Order (SRO), dated August 25, in this regard.
Although the VAT on internet services is 5.0 per cent, the NBR levied 15 per cent VAT on its value chain in the budget for 2019-20.
Both policymakers and internet service providers have repeatedly urged the NBR to bring down the VAT to 5.0 per cent to help survive the industry.
ICT minister Mustafa Jabbar and state minister Zunaid Ahmed Palak also sent letters to the finance minister and the NBR requesting him to cut the VAT and include the value chain under the ITeS.
Talking to the FE on Thursday, Internet Service Providers Association of Bangladesh (ISPAB) president MA Hakim said the internet service industry has incurred 20 per cent loss in the last 14 months due to the higher taxes on its value chain services.
Some 80 to 100 small scale entities also faced closure due to this reason, he said.
He said the internet value chain should be included under the ITeS (information technology enabled services) category under the NBR in a bid to help the industry expand in the rural areas.
Post and telecommunication minister Mustafa Jabbar, earlier in a letter to the finance minister, requested including the ILDC, IIG and ISP under the ITeS category to create a level-playing field for the IT industries.
State minister Zunaid Ahmed Palak made the similar request sending a letter to the NBR.
Earlier, the ISPAB threated to suspend the internet services across the country on a limited scale if the VAT-related complications are not solved. ISPAB president MA Hakim said they have not gone to the hardline following assurances of the policymakers.
A total of eight million customers are using internet connections provided by the ISPAB, while its broadband services have around 35 million subscribers.
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