The recent imposition of a 5% supplementary duty on mobile services and a Tk 100 increase in VAT on SIM connections are anticipated to adversely affect mobile consumers and the telecommunications sector, said
Historically, higher service costs have prompted customers to reduce mobile phone usage, leading to lower revenue and decreased contributions to the government treasury. The VAT increase on SIM connections, from Tk 200 to Tk 300, is also likely to impede new subscriber growth. These measures result in South Asia's highest mobile service tax rates and, coupled with high inflation, may further stifle industry growth and innovation, according to a press release on Wednesday.
Mobile operator representatives voiced their concerns at a post-budget press meet held at the Association of Mobile Telecom Operators of Bangladesh (AMTOB) secretariat in Dhaka’s Banani.
Taimur Rahman, Chief Corporate and Regulatory Affairs officer of Banglalink, Shahed Alam, Chief Corporate and Regulatory Affairs Officer of Robi Axiata, Hans Martin Henrichsen, Chief Corporate Affairs Officer of Grameenphone and Lt Col Mohammad Zulfikar (Retd.), Secretary General of AMTOB discussed their concerns with the journalists.
Despite repeated requests to rationalise mobile sector taxes, the government has increased levies, which will have widespread economic impacts. Past recommendations were not reflected in the national budget proposal.
Data from the Bangladesh Telecommunication Regulatory Commission (BTRC) indicates that over 120 million out of 192.2 million SIM card holders use the internet, making it an essential part of daily life. Despite the Smart Bangladesh initiative, 40-45% of the population remains unconnected. Compared to neighboring countries, Bangladesh significantly lags in data usage, but there is substantial potential for growth in both revenue and customers, said the release.
Due to the new taxes, customers will pay Tk 139 for services worth Tk 100, the highest in South Asia. Currently, Bangladeshi mobile internet users consume an average of 6.5 GB of data per month, compared to 27-29 GB in India. Consumer-level mobile internet service taxes are significantly lower in other countries: Malaysia (6%), Thailand (7%), Nigeria (7.5%), Singapore (9%), Indonesia (11%), Philippines (12%), Cambodia (13%), India (18%), Sri Lanka (23.5%), Nepal (26.2%), Bangladesh (33.25%), and Pakistan (34.5%).
As Bangladesh progresses towards the "Smart Bangladesh" vision, 42% of the population still lacks telecom services. Among current users, 63% use mobile internet and 54% are 4G subscribers, indicating significant growth potential.
The additional 5% supplementary duty is expected to generate about Tk 1.5 billion in revenue, but this could be achieved by increasing data usage instead of raising levies. The current policy contradicts the Smart Bangladesh vision. A rational tax structure is essential for accelerating economic growth through enhanced mobile services and increased mobile internet usage, added the release.