A good number of mobile users have whatsapp, viber, imo, or messenger at their handsets, for free phone call through internet. If the mobile operators reduce VAT, it will surely reduce their earnings also; because number of phone calls using social networking apps, instead of mobile SIM, will naturally increase then.
A senior NBR official made the comment on condition of anonymity to Bangladesh Post while trying to clarify why mobile operators are hesitant to reduce internet VAT despite repeated government warning.
The existing VAT on the internet for the subscribers’ level now stands at 5 percent. But, defying the law, mobile operators are still taking 15 percent VAT, creating discontent among millions of clients.
In this regard, Association of Mobile Telecom Operator of Bangladesh (AMTOB) claimed that the new instruction is effective for the ISPs only, as the service code ‘S 12.14’ was mentioned under ‘S 012’ for the internet providing organisations.
The allocated service code for the mobile operators is ‘S 12.10’.
So, they concluded, it is not clear whether the instruction will be applicable to mobile operators.
While contacted, the ICT minister Mustafa Jabbar said, “The cell phone operators don’t want to reduce the VAT on using the internet. They are now utilising the chances of complication after issuing an SRO by the NBR.”
It is a planned situation, the minister asserted. Amid growing discontent among the clients, AMTOB recently sent a letter to national Board of Revenue (NBR), seeking to know whether they also have to implement the reduced VAT. Contacted over the issue, AMTOB director general TI Nurul Kabir said, “There are some legal complexities in applying the reduced VAT for mobile operators. We have sent a letter to NBR seeking explanation.”
“If NBR orders to collect 5 percent vat then we will abide by the instruction,” he added.
Categorically rejecting AMTOB’s logic of legal complexity, NBR officials said nothing is complex. Mobile operators are not reducing the vat willingly.
On July 4, after the budget was passed reducing VAT on internet, BTRC sent a notice to all mobile operators inquiring whether they had implemented the new VAT.
The finance minister, on the same day, also warned of stern action if operators do not reduce internet VAT.