Operators worried as govt weighs higher tax on mobile services

The country's mobile-network operators have voiced their disapproval of a potential 5-percent increase in supplementary duty (SD) on basic mobile-phone services like talk time and internet data usage.
This comes after news reports suggested the National Board of Revenue (NBR) is considering the measure for the upcoming FY2024-25 national budget.
Industry leaders argue that the additional tax would hamper the growth of the mobile sector and jeopardise the government's 'Digital Bangladesh' and 'Smart Bangladesh' efforts.
They believe the increased cost would disproportionately affect ordinary people, especially those relying on basic mobile services.
Currently, a 15 per cent SD is applied on top of a 15 per cent value-added tax (VAT) on mobile phone talk time and internet data usage.
Recent news reports suggest the proposed increase has been finalised for the budget after revenue authorities presented fiscal plans to Prime Minister Sheikh Hasina on Tuesday.
"Imposing further supplementary duty, from the existing 15 per cent level, on an essential service like telecommunication would negatively impact the growth of this sector," said Otto Magne Risbakk, chief financial officer of Grameenphone.
He said the expansion of internet and digital services offered by mobile operators is a key enabler to the government's 'Smart Bangladesh' vision and facilitating digitalisation across various sectors.
Mr Risbakk expressed hope that the government would reconsider the proposal and consider industry suggestions for a more rational tax structure in the upcoming budget.
Echoing the same, Sahed Alam, chief corporate and regulatory officer of Robi Axiata Limited, talked about the existing high tax burden on mobile services and warned that a further increase would adversely affect both customers and overall mobile internet usage.
He said, when the number of mobile internet users has been declining for the past few quarters, the increased tax burden will further accelerate the negative trend.
"We think that overall the objective of increasing the tax rate will not be successful as it will reduce the amount of total mobile consumer spending," he said.
Taimur Rahman, chief corporate and regulatory affairs officer of Banglalink, stressed that mobile phones are an essential service for people from all walks of life. Additional taxes could create a significant barrier to access, especially for new users from disadvantaged communities.
This, he argued, would impede progress towards achieving the UN's Sustainable Development Goals and the vision of a technologically advanced 'Smart Bangladesh'.
The Association of Mobile Telecom Operators of Bangladesh (AMTOB) said the industry already has a high tax burden as operators retain only Tk 2 out of every Tk 100 collected from customers.
Out of every Tk 100 collected from a subscriber, telecom operators have to pay Tk 39 to the National Board of Revenue as VAT, SD, SIM tax, customs duty, corporate taxes, etc.
The challenges posed by revenue sharing, which is roughly Tk 18 out of every Tk 100, with ecosystem players such as the International Internet Gateway, International Gateway, tower companies, and so on, according to AMTOB.
Another Tk 15 from every Tk 100 has to be paid for annual licence fees, annual spectrum fees, and revenue sharing with Bangladesh Telecommunication Regulatory Commission (BTRC).
Operational expenses further strain financial resources, with Tk 26 of every Tk 100 collected being allocated for covering costs related to network operations, marketing, administration, human resources, depreciation and finance," as per the breakdown of each Tk 100 usage.

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