Tax cut likely for telecom

The government is likely to cut some taxes on the telecom sector in the upcoming budget under a tax structure reform initiative, Telecommunication Secretary Sunil Kanti Bose has hinted.
Without elaborating about the possible beneficiary areas, Bose said, “Taxation should be conducive to the telecom sector in line with the vision of Digital Bangladesh.”
"It's our weakness that we did not have any research on taxation of telecom sector," the secretary said. "The next budget can reflect something based on our learning in the last one year."
Hasanul Haq Inu, chairman of the parliamentary standing committee on the post and telecommunication ministry, echoed the secretary and said some decisions on awarding the sector tax cuts have been finalised, while some remain pending with the concerned ministry.
Inu said the parliamentary body already suggested withdrawal of the Tk 800 tax on SIM (subscriber identity module). The committee also recommended reducing the existing 65 percent tax on the imports of telecom equipment to 25 percent in the coming budget.
The hint of a possible tax cut on telecom and information and communication industry came at a discussion on "Taxation on Telecom Sector and Ppcoming budget" in Dhaka yesterday.
The Telecom Reporters Network Bangladesh organised the discussion where Sajal Zahid, a member of this reporters' forum, presented a keynote paper. Shawkat Milton, TRNB secretary, moderated it.
On the introduction of GSM (Global System for Mobile) technology in Bangladesh in 1997, the telecom sector has flourished.
Six mobile operators now serve 5.5 crore customers whereas the 11 landline operators have brought 12 lakh customers under their networks.
However, the operators have blamed the excess taxation on the sector for the industry's recent slow growth.
"The existing tax regime is not comfortable for future investment," said Ashraf H Chowdhury, secretary general of the Association of Mobile Telecom Operators in Bangladesh.
He said only tax reduction could encourage the operators to think about the untapped rural areas.
Terming the Tk 800 SIM tax 'a burden” for the telecom sector, Md Mahfuzur Rahman, director (Technical and Corporate Affairs) at Citycell, said SIM tax contributes only 20 percent of the total revenues the government earns from the sector a year.
"If the government removes the entry barrier (SIM tax) from the telecom sector, the earnings will be doubled within the next five years," he said.
More subscribers mean more taxes, Rahman explained.
The telecom sector pays Tk 5,000 crore tax a year on an average to the national exchequer. The government earns the revenues from SIM tax, equipment import tax, yearly revenue sharing and VAT (value added tax).
"It's time to revise the tax on ICT and telecom sector," said D.Net Executive Director Ananya Raihan. He said only a rational taxation can stimulate the growth of the sector.
The current budget does not match the goal of government to build a ICT based nation, said Zia Ahmed, chairman of Bangladesh Telecommunication Regulatory Commission.
He said tax cut has become crucial for the telecom sector to attract more foreign direct investment.