Customers have started paying additional charges for SMS, internet and phone calls since midnight Friday.
The hike comes following the announcement to increase supplementary duty (SD) on the services provided through mobile phone SIM/RIM card in the budget proposal for the year 2020-21.
All mobile operators, through SMS, have informed their respective subscribers that the newly-imposed SD will be applicable in each service they use as the National Board of Revenue (NBR) has already issued Statutory Regulatory Order (SRO) in this regard.
However, industry insiders said, such SD increase will become an obstacle in the way to a Digital Bangladesh. Hence, urging the government, they said to reconsider the decision before budget implementation.
The government moved to raise the SD on mobile services by 5 percent for 2020-21 fiscal year, an equal raise from the preceding year.
Finance Minister AHM Mustafa Kamal while placing the proposed budget for the fiscal year 2020-21 on Thursday proposed to increase the SD from 10 percent to 15 percent on the services provided through mobile phone SIM/RIM card.
Banglalink Chief Executive Officer, Eric Oss said, “Our customers are already using telecom services carrying a heavy tax burden. Additional SD on telecom services will especially affect relatively low-income consumers. We urge the government to withdraw VAT on the internet. This in turn will limit their ability to participate in the digitalization of the country”.
“We urge the government to withdraw the VAT on the internet in view of the impact of the coronavirus-induced economic crisis on internet users. We also request the government to reconsider the minimum tax imposed on mobile operators”, he added.
Grameenphone’s director and head of public and regulatory affairs, Hossain Sadat, said, “The increase of the SD in the National Budget 2020-21will result in an additional burden to the customers who need essential communication services the most during the Covid-19 pandemic and beyond. Such a decision will also be unfavorable to unlocking possibilities of Digital Bangladesh”.
“We urge the government to reconsider this decision before implementing in the attribution of our valued customers interest”, he added.
Robi Axiata Limited chief corporate and regulatory officer, Shahed Alam said, “Increasing supplementary duty (SD) by five percent on all telecom related services is highly regrettable. According to the SRO issued by NBR, we are going to implement the new SD rate from midnight (12 AM) on Friday, all preparations in this regard have been completed”.
“We need to remember that even before this proposed budget, 53 out of every 100 taka spent by the customers was going to the Government exchequer in different forms of taxation. Hence, adding additional SD on the already ultra-heavily taxed telecom sector will only bring further misery for the customers’, he added.
“A large part of the population had become reliant on digital communication during the ongoing pandemic to remain connected, and the raising of SD will certainly cause an adverse impact on this trend. We are very sad that even after making significant contributions to the realization of Digital Bangladesh vision by 2021, the telecom sector’s problems have been completely ignored in the proposed budget”, he feared.
With the proposed SD, total tax now stands at 33.57 percent. Therefore, a subscriber will have to recharge Tk 133.25 to avail services worth Tk 100, or against each Tk 100 recharge, a user will get services worth Tk 75.05.
Currently, in addition to the SD, mobile users pay a 15 percent value-added tax and 1 percent surcharge on talk-time and messaging services, while the VAT on mobile internet use is 5 percent.
The government first imposed a 3 percent SD on mobile phone services in FY2016, which was increased to 5 percent in FY2017 and 10 percent in FY2020.
According to BTRC, Bangladesh had more than 165 million mobile phone users until March this year. Of them, over 95 million access the internet through mobile phones.