Mobile operators caught in the cross-fire over SD hike rollout

Mobile operators are in the most bewildering situation: they are caught in the middle of a misunderstanding in the interpretation of the law by the revenue authority and the telecom regulator.

Following the announcement of the 5-percentage point hike in supplementary duty for all mobile services in the finance bill for fiscal 2020-21, they complied with the order within hours by raising the rate at the users’ end.

Then on Friday, they have been blasted with an angry email from the Bangladesh Telecommunication Regulatory Commission (BTRC), which warned of dire consequences if the new supplementary duty of 15 per cent is implemented before July 1.

But, the finance bill dictates that the new rates should be in force from the next day.

All sorts of no-objection certificates (NOCs) and tariff approvals will be suspended if the carriers increase the duty, according to the email sent by a senior assistant director of the BTRC’s systems and services division.

Operators will not be able to offer any services if the NOCs and service and tariff approvals are cancelled.

“Please note that any supplementary duty declared in the budget for fiscal 2020-2021 regarding cellular mobile phone usage is supposed to be applicable from July 1, 2020,” the email read.

However, the National Board of Revenue officials said operators should act upon as per the finance bill.

“There are some portions of the proposed taxes in the budget that have to be implemented immediately and the duty for telecom services is one of them,” said an NBR official, asking not to be named.

Different taxes were imposed on mobile use during the announcement of the national budget in the last few years and all those took effect from the next day, he added.

“BTRC might not be aware of this; they need to go through the finance bill again,” the official said.

Mobile operators declined to give an official comment on the matter but some of their officials said they received the order on the supplementary duty on Thursday when Finance Minister AHM Mustafa Kamal was placing the budget in the parliament.

BTRC Chairman Md Jahurul Haque acknowledged having sent the email and said the measures for raising tariffs and duties usually come to effect when the budget gets passed.

“We have contacted the NBR as the mobile operators have raised the issue to us. We are considering their points and if those are fair, we won’t go for any action against them,” Haque told The Daily Star last evening.

Apart from the latest hike in the supplementary duty, there is a 15 per cent value-added tax and 1 per cent surcharge on mobile phone bills from before, which make the total tax for mobile phone use 33.25 per cent now.

Market insiders said the total revenue in the industry currently stands at about Tk 25,000 crore and the government eyeing an additional Tk 1,000 crore to Tk 1,200 crore by increasing the supplementary duty.

Operators, however, said the government’s target might not be met because people are likely to limit their use in the face of rising taxes.

As of March, there are 16.53 crore active mobile connections in the country, of which 9.52 crore are being used for internet services as well, according to data from the BTRC