Reconsider VAT hike for ICT sector's growth: BASIS

Bangladesh Association of Software and Information Services (BASIS), the

national trade organisation representing the country's IT sector, urged the government to reconsider the

increased value added tax (VAT) rates introduced in the Value Added Tax and Supplementary Duty (Amendment) Ordinance, 2025.

The hike in VAT on internet and telephone services will hinder the growth of the ICT sector, the trade body said in a press statement on Sunday.

In a letter to Md. Abdur Rahman Khan, chairman of the National Board of Revenue (NBR), BASIS mentioned the increased VAT rates for service codes: S012.10 and S012.14.

Telephone services now face a VAT rate of 23 per cent, while internet services are subject to 10 per cent.

BASIS expressed concerns that such increases are counterproductive to building a technology-driven Bangladesh.

Currently, over 300,000 young professionals, including 20 per cent

women, are employed in the Information and Communication Technology (ICT) sector.

Additionally, more than 600,000 freelancers rely heavily on internet

services for their livelihoods. The

VAT increase is expected to

adversely affect their operations and sustainability.

BASIS also warned that the revised VAT rates would negatively impact key sectors like e-commerce, f-commerce, and mobile financial services, all of which are critical to the country's digital economy.

Moreover, the association pointed out a significant challenge for small IT companies: the ordinance mandates

VAT registration for businesses with an annual turnover exceeding Tk 500,000, replacing the previous threshold of BDT 30 million.

BASIS argued that this decision poses an undue burden on small and medium enterprises (SMEs).

In light of these issues, BASIS has called on the government to reverse the VAT increases on internet and telephone services and reinstate the higher turnover threshold for VAT registration.

They believe the measures for reconsideration are crucial for fostering

the growth of the ICT sector and achieving the vision of a technology-driven Bangladesh.

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