Lifting VAT on Internet

Dhaka,  Sat,  23 September 2017
Published : 21 Apr 2017, 20:04:03
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Lifting VAT on Internet

DESPITE the important role played by the Internet in the recent economic growth of Bangladesh, the government continues to impose a value-added tax (VAT) of 15 per cent on the country's internet users. The increasing access to internet has secured remarkable development of Information and Communications Technology (ICT) in Bangladesh in respect of its hi-tech infrastructure, e-commerce, employment opportunities. However, the country's ICT-related research and development (R&D) and integrated socio-economic activities lag far behind Asia's middle-income countries like India and even Sri Lanka due to a poor rate of internet affordability. About 46 per cent of Bangladeshis remain outside the coverage of mobile phone network and internet. These people reside mostly in the rural parts of the country. The dream of a digital Bangladesh becomes irrelevant without their pro-active participation. 

Moreover, the government is still unwilling to withdraw heavy corporate taxes from the Mobile Network Operators (MNOs) - 40 per cent for the publicly-listed companies and 45 per cent for other MNOs. This has made complicated the possible resurgence of the ICT sector along with IT-based governmental services. Besides, policymakers are reluctant to relax the existing supplementary tax and VAT on SIM cards for mobile phones and internet accessories. Furthermore, the growing taxation is actually pulling back further investments in Bangladesh's hi-tech industries and service sectors - thereby impacting upon the per capita GDP growth and job opportunities for major segments of the population. Therefore, it is high time that the government reviewed its VAT policy for the internet and reduced corporate taxes for MNOs down to 35 per cent like ordinary businesses. 

Mainuddin A. Rafin

Gulshan-1, Dhaka

 
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