The government is considering reducing the tax on new SIM card issuance and abolishing taxes on SIM replacements and Internet of Things (IoT)/Machine-to-Machine (M2M) SIMs as part of efforts to expand the telecommunications sector and strengthen digital connectivity.
According to National Board of Revenue (NBR) sources, a proposal to this effect is currently under consideration.
“The Bangladesh Telecommunication Regulatory Commission (BTRC) sent a letter to the Posts and Telecommunications Division on May 5, which was later forwarded to the NBR,” a senior NBR official told UNB.
The recommendations were discussed at a high-level meeting chaired by PM’s adviser adviser on posts, telecommunications and ICT Rehan Asif Asad on April 29, according to the letter.
Senior officials from the Posts and Telecommunications Division, NBR, BTRC and other relevant agencies attended the meeting.
BTRC said the current tax structure on SIM issuance has become a significant barrier to market expansion and subscriber acquisition.
According to the regulator, mobile operators currently spend about Tk 700 to activate a new subscriber connection.
Of the total amount, Tk 300 is paid as SIM tax, around Tk 50 covers the SIM kit cost, while the remaining Tk 350 is spent on operations, distribution, marketing and other taxes.
The commission said operators often subsidise nearly half of the acquisition cost, while about 43 percent of the expenditure goes to the government as non-recoverable SIM tax.
BTRC also noted that the average revenue per user (ARPU) for mobile operators currently ranges between Tk 130 and Tk 150 per month.
Consequently, operators need nearly five months to recover the cost of acquiring a new customer, though the actual payback period can stretch to six to nine months due to lower usage levels and shorter customer lifecycles.
The regulator said the prevailing tax regime has made new customer acquisition economically less attractive and created a structural impediment to telecom market growth.
Citing international practices, BTRC said only a handful of countries, including Jamaica and Ghana, continue to impose taxes on new SIM issuance.
On SIM replacement, the commission argued that replacement SIMs do not generate new subscriber connections or additional revenue for operators, as they merely reactivate existing mobile numbers.
“Imposing taxes on replacement SIMs amounts to double taxation and places an unnecessary financial burden on customers, particularly those who lose their handsets or SIM cards,” it said.
BTRC further recommended the complete withdrawal of taxes on IoT and M2M SIMs to accelerate digital transformation and facilitate the adoption of smart technologies.
The regulator noted that the overall tax burden on mobile services in Bangladesh stands at around 39 percent, significantly higher than in many other countries.
It added that IoT and M2M SIMs generate substantially lower revenues than conventional mobile connections, with average monthly earnings of only Tk 20–25 per SIM compared with Tk 130–150 from regular subscribers.
According to BTRC, maintaining the current tax burden could discourage investment and make large-scale deployment of IoT services economically unviable.
The commission said removing taxes on IoT SIMs could significantly expand the use of smart devices across sectors such as industrial automation, logistics, agriculture, energy management and smart city solutions, thereby enhancing productivity, reducing waste and creating new business and employment opportunities.
It also said wider adoption of IoT services would drive greater data consumption and eventually generate additional government revenue through VAT and service-related taxes.