Mobile internet unique users Bangladesh below South Asian average: GSMA

A file photo shows a man using the internet on his mobile phone in the capital Dhaka. — New Age Photo

According to a recent report by the GSM Association, an organization that represents the interests of mobile network operators worldwide, the unique mobile phone internet penetration in Bangladesh is lower than the South Asian average.

The report titled “Taxation of the Mobile Industry in Bangladesh” also made a number of tax-related recommendations for the growth of the sector.

Mentioning the taxes on the telecommunications sector which are significantly higher compared to the taxes applicable in the countries of Sub-Saharan Africa, the Middle East, North Africa, Asia-Pacific, Europe and Latin America, he said the mobile industry tax system in Bangladesh continues to be complex, with various taxes and fees imposed on consumers and mobile operators.

While some are general taxes and charges applicable to all sectors of the economy, most are specific and discriminatory for the mobile sector, undermining the socio-economic contribution of the sector, according to the report.

In addition, for certain general taxes such as corporation tax and minimum turnover tax, a specific and higher tax rate applies to the mobile sector, the GSMA said.

Mobile customers are now subject to the payment of a value added tax of 15% (the effective rate is 17.25%), an additional duty of 15% and a surcharge of 1% on the base rate or the value of the service.

In addition, the government collects 30% of the retail rate for outgoing international calls less carrier charges.

Listed and unlisted telecommunications companies are expected to pay corporate taxes at rates of 40 percent and 45 percent respectively.

Even if a company is a loss-making entity, it is supposed to pay tax at the rate of 2% on its turnover and if the amount of corporate tax is less than the turnover tax, l operator is supposed to pay turnover tax.

The report indicates that the minimum turnover tax of 2 per cent is detrimental to the sustainable development of the mobile telecommunications sector.

“The high tax burden on mobile operators limits their ability to invest to improve the competitiveness of the telecommunications sector and for the country’s digital transformation,” the report said.

In view of the situation, the GSMA has requested the removal of the minimum turnover tax and the reduction of corporate taxes applicable to listed and unlisted telecommunications companies to 30% and 22.5% respectively.

GSMA Asia-Pacific Director Julian Gorman said that to reinvigorate the country’s mobile connectivity ambitions and boost economic growth, the government should take a number of initiatives, including aligning taxation of the country’s mobile sector with the rest of the economies.

Julian also recommended that the government reduce sectoral taxes for the telecommunications sector while streamlining the tax assessment mechanism.

The report showed that the mobile operator paid 50% of its revenue in taxes and fees to the government in 2020 and the ratio was 44% the previous year in Bangladesh.

The proportion of revenue that governments received from telecom operators in countries in Sub-Saharan Africa, the Middle East, North Africa, Asia-Pacific, Europe and Latin America was 26% , 24%, 24%, 21% and 18% percent respectively.

In Bangladesh, unique mobile Internet users make up 31% of the population, while in South Asia it is 37%.

The report states: “Despite the expansion of mobile coverage across the country and the total number of mobile connections and mobile internet connections at 18 crore and 12.4 crore respectively, there remains a significant unconnected population in terms of unique subscribers”.

Considering a unique subscriber penetration rate of 55% in Bangladesh, the GSMA estimated that about half of the population of Bangladesh was still not connected to a mobile network and that only 31% of the population (unique ) used mobile Internet services.

“This is below average in South Asia,” the GSMA said.

Among South Asian countries, penetration of unique mobile Internet users in India and Nepal is 38% and penetration is 52% in Sri Lanka.

But Bangladesh’s unique mobile phone penetration is above the South Asian average of 54%, according to the report.

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