VAT makes Internet accessibility costlier

Local hands were losing their competitive edge in the international software outsourcing job market in the wake of the VAT imposed on Internet use, said information technology (IT) sector insiders.
The costlier access to Internet was also leaving its impact on education, medical treatment, business transactions, communications and other net-based services, they also said.
There has already been 15 per cent value-added tax (VAT) imposed on Internet use and the government is retaining it for the next fiscal also.
A software outsourcing entrepreneur said: "As I rely on Internet as my main tool for exporting software, I need to get access to it at cheaper rates."
He noted that apart from depending on Internet for doing the jobs of outsourcing, the access to it was also very important for students doing study, those doing research and others rendering information technology (IT)-enabled services.
In the wake of mobile operators' launch of 3G Internet services, the people's way of learning changed to a great extent. But if the rates were high, he feared, the run on the information superhighway would be limited.
According to an Internet user, the government is already providing tax rebate on import and purchase of hardware, but, in the meantime, it is imposing VAT on the Internet use.
He called it a double standard on the part of the government and that it would only discourage the people from playing their part in building a 'digital Bangladesh'.
AKM Fahim Mashroor, former president of Bangladesh Association of Software and Information Services (BASIS), said: "We tried to convince our finance minister and NBR officials that Internet should be exempt from VAT, but they do not try to understand it."
"The NBR bosses do not want to listen to us. Actually, they are not educated in the area of ICT and so it is tough to let them understand the importance of providing access to Internet at lower costs."
He said the government was collecting VAT for helping the people. If the jobs of outsourcing and other ICT-related work were exempt from VAT, more employment opportunities would be created and it would also be a help to the people.
Akhteruzzaman Monju, president of the Internet Service Providers Association of Bangladesh (ISPAB), pointed out that as the dependence on Internet for the purposes of education, medical treatment, business transactions and communications was increasing gradually, it could the engine of socioeconomic development.
He suggested cutbacks in different existing duties on import of Internet-infrastructure equipment and the VAT on its use to ensure more people's access to the facility outside towns at cheaper and affordable costs.
"VAT exemption would increase Internet use, help earn more foreign currencies through outsourcing of jobs and also help develop ICT infrastructure," he said to substantiate his suggestion.
One user said: "Currently I need to pay Tk 150 extra as VAT while purchasing a Tk1000 package from a mobile operator."
He said the government would be more benefited from exemption of VAT on Internet use than imposition of it.
Kamal Uddin Ahmed, additional secretary of the ministry of information and communication technology (MoICT), told the FE that they had a meeting with the Prime Minister's son regarding VAT exemption and other ICT issues.
The MoICT official said: "We know currently more than 100 thousand freelance software developers are doing outsourcing jobs for the international market and they are earning foreign currencies."
He added: "We are concerned about them and our government is also concerned about their demand for exemption of Internet from VAT to help them stay competitive in the outsourcing job market."
An outsourcing entrepreneur said Internet was the main tool he was using for doing his outsourcing job, but currently he was paying more for his use of it on account of VAT. The extra cost was making their job costlier in the competitive international market.
Students using Internet also have a say on this impediment to the fast-moving activity. One of them said: "I do not earn money, so it is costlier for me to use the Internet at the current tariff rate."
The student made a strong plea that the government should offer them and researchers cut-rate Internet access.