Taxmen, telcos squabble over Tk 29.31b VAT claim

Dhaka,  Mon,  25 September 2017
Published : 02 Aug 2017, 22:55:29 | Updated : 03 Aug 2017, 09:55:17

Taxmen, telcos squabble over Tk 29.31b VAT claim

Mobile operators may move int'l court of arbitration for tax disclaimer
Doulot Akter Mala
Government revenue authorities and mobile-phone operators in Bangladesh are wrangling over Tk 29.31 billion worth of SIM-replacement tax after exhausting legal fights, officials said.

The two sides earlier had gone to the court with the tax dispute, and the revenue department claimed it won the legal battle.    

On the other side, the mobile multinationals said they were ready even to go for seeking international arbitration in their bid to turn the tables.      

The Large Taxpayers Unit (LTU) under the Value Added Tax (VAT) wing of the National Board of Revenue (NBR) demanded Tk 20.48 billion in the first phase in 2012 and Tk 8.83 billion in a second phase last month (July 2017).

It (LTU) conducted a first-phase scrutiny for July 2007- December 2011 period on payment of SIM- replacement tax by the operators.

In the second phase, the unit last month demanded Tk 8.83 billion in the SIM tax for the period between July 2012 and June 2015.

VAT officials said the unit raised the second-phase demand on a random basis as mobile-phone operators refused to allow VAT officials to investigate the issue by furnishing documents.

On the other side of the fray, Association of Mobile Telecom Operators Bangladesh (AMTOB) leader TIM Nurul Kabir said they do not agree with this kind of tax demand.

He termed such step a negative signal on attracting foreign investment into the country.    

A senior VAT official said the NBR's VAT appellate tribunal on June 22 last issued an order in favour of the NBR to collect Tk 20.48 billion worth of VAT that has been claimed in the first phase.

"Four telecom operators—Grameenphone, Robi, Banglalink and Airtell—lost the legal battle as per a recent tribunal verdict," he said.

However, the mobile operators dismissed it as a "fictitious" claim and vowed to go for further legal fight.

There had been no tax on SIM replacement until June 2014. SIM tax was charged at Tk 300 on sales of new SIMs.

Currently, tax on both new and replacement SIMs is Tk 100.

Mr Kabir, AMTOB secretary-general, said Bangladesh Telecommunication Regulatory Commission (BTRC) issued guidelines in 2010 for the operators, and before that the companies were following guidelines of the NBR issued in 2007.

As per that guidelines, mobile operators had to pay SIM tax on sales of new SIM to each subscriber, he said.

"We used to pay VAT at the time of supplying SIM from warehouse on the basis of per SIM," he added.

He also questioned the process of investigation by the NBR.

"The telecom operators invested US$ 3.8 billion for 3G network service. As large taxpayers, we expect fair judgment from the government," he added.                                                                                                                                                                                                                                                                                                                                                                                                                                                       

The operators would be discouraged from upgrading to 4G network if such situation continued, he said. The VAT official said the unit sent letters to three telecom operators - Robi, Banglalink and Grameenphone - inviting them to sit for a hearing on August 3, 6 and 7 respectively to discuss the second-phase claim on SIM-replacement tax.

"Mobile-phone operators replied to the demand notice of the unit, terming the issue a subjudice matter," he said.

The second-phase tax claim would go down if the operators cooperated in the investigation, he added.

In the first-phase claim, the operators will have 90 days for complying with the verdict or challenging it at the Supreme Court.

The LTU has already approached the Supreme Court so that the operators cannot receive stay order unilaterally against the verdict from the court keeping the VAT office unawares.

LTU would implement the tribunal's verdict following legal process after expiry of the timeframe.

In addition to the disputed amount, the operators will also have to pay penalty and interest amount at the rate of 2.0 per cent per month for delay in payment, he said.

AMTOB Secretary-General Nurul Kabir said the companies would continue the legal fight and were ready to seek assistance of the international court of arbitration, if required.

The VAT official said the mobile-phone operators can apply for Alternative Dispute Resolution (ADR) to settle the long-pending issue.

Editor : A.H.M Moazzem Hossain
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