Withdraw all sorts of taxes, VAT on internet

FE Report
The country's leading ICT-related trade bodies called on Wednesday for withdrawal of all sorts of taxes and VAT on the use of internet.
Withdrawal of such taxes and VAT would help garner more than Tk 50 billion in indirect revenue for the government, the trade bodies said.
"Currently, the government is getting Tk 11 billion in annual revenue through the VAT and tax imposed on internet usage", Secretary General & CEO of Association of Mobile Telecom Operators of Bangladesh (AMTOB) T I M Nurul Kabir said at a post-budget press briefing held at a city hotel.
"However, our analysis suggests that withdrawal of such tax and VAT can generate more than Tk 50 billion in indirect revenue as internet is a major enabler for economic activities", he told the press briefing.
AMTOB along with six other ICT-related trade bodies including Bangladesh Association of Software and Information Services (BASIS), Bangladesh Computer Samity (BCS), Bangladesh Mobile Phone Importers Association (BMPIA), Internet Service Providers Association of Bangladesh (ISPAB), Bangladesh Association of Call Centres & Outsourcing (BACCO) and e-Commerce Association of Bangladesh (e-CAB) jointly organised the briefing.
Their views came just weeks after Finance Minister AMA Muhith placed the proposed budget for the fiscal year 2018-19.
Focusing on the budget, the ICT leaders observed that it has hardly been able to meet their expectation level.
ICT leaders also slammed the recent government move to impose 15 per cent VAT on the assembling of mobile phones in the country.
Originally, both the mobile manufacturers and assemblers were exempted from VAT in the country.
However, a Statutory Regulatory Order (SRO) issued by NBR earlier this month has provisioned that only the mobile phone manufacturers would be eligible for VAT exemption while the mobile assemblers would be subject to 15 per cent VAT.
"Already a number of mobile companies have set up their assembling plants in the country thanks to the earlier VAT exemption on mobile assembling", said Ruhul Alam Al Mahbub, president of Bangladesh Mobile Phone Importers Association.
"However, this sudden imposition of VAT would now discourage further investment and would make local assembling costlier than import", he added.
"Internet is an essential part of all types of businesses and a major enabler for all sectors of the economy", said Syed Almas Kabir, president of BASIS.
"Imposition of any kind of tax and VAT on internet discourages the use of all digital platforms", he added.
ICT industry leaders at the event also mentioned that a 10 per cent increase in internet penetration adds 1.0 per cent increase in GDP.
The BASIS president also noted that the latest budget has reduced import tariff on all sorts of software from 25 per cent to 5.0 per cent.
"Originally, we proposed to reduce the import tariff only on operating systems, database, development tools and cyber security as these are not manufactured in the country", Kabir said.
"However, the budget has reduced the tariff on the import of all software", he added.
"Such move would be detrimental to the local software makers", the BASIS president said.
"We think this has happened due to an error in the definition of HS Code and the government should move to amend it soon", he added.
ICT leaders, at the event, also called for withdrawal of VAT and taxes on network equipment including fiber optic cable, ethernet interface card, computer network switch, hub, router and server battery.
Noting that the budget has increased the VAT on IT-enabled services from 4.5 per cent to 5.0 per cent, they also called for withdrawal of such VAT on ITES.
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