April 20, 2017 - 3:52pm
Local information and communication technology (ICT) entrepreneurs have demanded that the government withdraw value added tax (VAT) on internet usage in the national budget for the 2017-18 fiscal year to help build Digital Bangladesh by 2021.
ICT experts and business leaders made the proposal at a pre-budget discussion with the National Board of Revenue (NBR) in Dhaka on Wednesday.
“It is internationally recognised that if the use of internet increases by 10%, the gross domestic product (GDP) of a country will go up by 1%. But in our country, various taxes and charges are the main barriers to internet penetration, affecting the GDP growth,” said Mostafa Jabber, president of Bangladesh Association of Software and Information Services (BASIS).
Internet usage in Bangladesh is currently subject to 15% VAT, 5% supplementary duty and 1% surcharge. Jabbar said the future generation will need better internet services to live in an increasingly virtual society.
“Due to VAT on internet usage, poor people as well as the young generation are being deprived of that. This is why we want VAT-free internet,” he said. “This would help achieve the government target of $5 billion ICT export by 2021”.
The BASIS president also called for a reduction in the corporate tax rate for ICT industries to 18% from the existing 35%.
At the same programme, Internet Service Providers Association of Bangladesh (ISPAB) President MA Hakim proposed the withdrawal of the existing 22.16% VAT and supplementary duty (SD) on all types of internet equipment such as modems, interface cards, computer network switches, hubs, routers, servers and batteries.
NBR Chairman Md Nojibur Rahman chaired the meeting attended by, among others, NBR members Jahangir Hossain (VAT policy), Parvez Iqbal (Tax Policy) and Lutfor Rahman (Customs Policy).
In another pre-budget meeting the same day, Bangladesh Reconditioned Vehicles Importers and Dealers Association (Barvida) demanded a special duty facility on the import of hybrid cars in the next budget.
The organisation urged the government to fix a separate harmonised system (HS) code for the imported cars, helping buyers choose more eco-friendly vehicles.
The importers also urged the government to deduct 35% from the prices of reconditioned hybrid cars that are shown on the yellow book at the time of valuation at ports.
Currently, there is no special duty on imports of used, reconditioned or old hybrid cars, though they are more environmentally friendly and fuel-efficient.
“Businessmen are not importing these cars due to high duty rates coupled with a lack of special duty or taxes,” said Barvida President Habibullah Dawn.
He said consumers must pay about 25% more for a hybrid car compared to the same model of reconditioned vehicles.
As an alternative proposal, Barvida has called upon the government to fix separate duty slabs for hybrid cars by fixing a separate HS code, and put such cars in the lowest slab of supplementary duty.