The cost of using a mobile phone would go up by more than 5 percent as the proposed budget looks to hike the supplementary duty on all kinds of SIM services to 15 percent from the previous 10 percent.
The carriers have already implemented the greater supplementary duty from 12:00am today, which has taken the customers’ total service tax to 33.25 per cent.
The National Board of Revenue (NBR) yesterday evening issued a Statutory Regulatory Order (SRO) to this effect, shortly after Finance Ministaer AHM Mustafa Kamal’s budget speech was over.
Carriers complied with the SRO and have started updating their billing system and sent text messages to all their customers about it.
“Increasing supplementary duty on all telecom related services is highly regrettable and according to the SRO issued by NBR, we are going to implement the new SD [supplementary duty] rate from 12:00am midnight. All preparations in this regard has been completed,” said Shahed Alam, chief corporate and regulatory officer at Robi.
Apart from the supplementary duty, mobile phone users also have to pay 15 percent VAT and one percent surcharge on their bills, which takes the total tax for mobile phone usage to 33.25 percent.
Therefore, to get service worth Tk 100 users will have to recharge Tk 133.25, or against each Tk 100 topped up, a user would get services of Tk 75.05.
Even before this proposed budget, Tk 53 out of every Tk 100 spent by customers was going to the government exchequer in different forms of taxation, Alam said.
“Hence, adding 5 per cent SD on the already ultra-heavily taxed telecom sector will only bring further misery for customers,” he said.
Both operators and users expressed dissatisfaction at the move and said in the last few years, tax on mobile phone use has increased, which has negatively affected customers’ service-availing trends.
Usage and user numbers will certainly not increase under this tax structure, said a chief executive officer of a leading carrier.
He said in the last six years taxation on users increased 122 percent, which goes against the government’s digitisation vision.
“We cannot accept this proposal as it will increase our costs,” said Sarwar Shatil, a student of Daffodil International University.
This process will increase all costs related to mobile-phone services and that will be a disaster, he also added.
Shahed Alam said a huge portion of the population had started to rely on digital communication during the shutdown and social distancing measures enforced due to the coronavirus pandemic. Raising SD will certainly have an adverse impact on this trend.
“We are very sad that even after making significant contributions to the realisation of the Digital Bangladesh vision by 2021, the telecom sector’s problems have been completely ignored in the proposed budget,” he added.
As of March, there are 16.53 crore active mobile connections in the country, of which 9.52 crore are also connected to the internet, according to Bangladesh Telecommunication Regulatory Commission.
Total revenue in the market currently stands at around Tk 25,000 crore.
Robi’s top brass also expressed their dissatisfaction at the continuation of the 2 percent minimum tax which was imposed on their revenue in the 2019-20 budget.
“Considering mobile operators’ contribution in fighting the current Covid-19 pandemic and building the digital ecosystem, we believe there is still an opportunity to review this self-defeating tax and hope that the government will take positive decisions in this regard,” Alam said.
In the upcoming budget, the finance minister has also proposed a continuation of the VAT exemption on mobile device manufacturing, as well as the 5 percent tax on assembling.