Mobile users hit hard by the VAT hike

At present, the number of mobile internet users in the country is 11.45 crore while the total number of internet users reached 12.55 crore in May.

July 02, 2022, 10:55 p.m.

Last modification: July 02, 2022, 10:58 p.m.

Representative image. Photo: courtesy

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Representative image. Photo: courtesy

The Value Added Tax (VAT) burden on mobile internet users is increasing as operators started charging 15% VAT on data service from July 1, when the new taxation began , instead of 5%.

The Association of Mobile Telecommunications Operators of Bangladesh (AMTOB) recently sent a letter to the Bangladesh Telecommunications Regulatory Commission (BTRC) in this regard.

In the letter, AMTOB said that under the Value Added Tax and Additional Duties Act 2012, mobile operators were allowed to collect 15% VAT in the prescribed manner, but charged a reduced VAT rate.

“But due to changes to the 2022 finance law, mobile network operators must collect and remit to the Treasury a 15% VAT on data services from July 1, 2022,” reads the letter. .

When questioned, Subrata Roy Maitra, vice president of the BTRC, said that the problem was related to the National Board of Revenue (NBR).

“The VAT increase will hit consumers in the pocket. So, being the regulator of the sector, we will write to the BNR about it,” he said.

Shahed Alam, Managing Director and Regulatory Officer at Robi Axiata Limited, said the Value Added Tax and Additional Duties Act 2012 was enacted to increase the collection of VAT with equity. This law also guaranteed the availability of all types of discounts.

“In line with the basic principles of VAT and global standards, the 2012 law (effective from 2019) imposed universal VAT at the rate of 15%. But it is very unfortunate that since the enactment of the law, VAT was levied at a reduced rate, and reimbursement was limited by changing the definition of instruments,” he said.

As a result, the effective VAT rate at company level continued to increase. Businesses must bear the brunt of this additional tax, he said.

“It is planned in the finance law for the current financial year to abolish the reduction or the regularization of VAT at a proportional rate. This means that even if there is a fair scope of adjustment, VAT rebates will be eliminated depending on the type of service and the overall availability of rebates will be limited,” he said.

“This will result in a much higher effective VAT rate, which we cannot afford. Not only that, the new law will increase the legal complexities of VAT. Due to which, from today, we have added VAT at the rate of 15% on all Internet packages in accordance with the relevant provisions of the VAT law,” he added.

At present, the number of mobile internet users in the country is 11.45 crore while the total number of internet users reached 12.55 crore in May.

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