Internet service providers have urged the government to resolve issues with VAT in the internet sector this month
While the operations of almost every office and business during the current novel coronavirus pandemic have become more dependent on the internet than at any time before, the price of fixed broadband internet is likely to go up by 30-40 percent at the consumer level.
The Internet Service Providers Association of Bangladesh (ISPAB) hinted at the price hike at a virtual press briefing on Saturday morning.
Noting that the government has imposed a 15 percent value-added tax (VAT) on value chain services – like the International Terrestrial Cable (ITC), International Internet Gateway (IIG) and Nationwide Telecommunication Transmission Network (NTTN) – in the new budget, the association leaders said they have to increase the price of internet if the freshly imposed VAT is not withdrawn.
The association, therefore, urged the government to review the current VAT rate on internet and bring it down to zero or five percent on all the services of internet infrastructure companies.
They also demanded the inclusion of ILDC, IIG and ISP industries into the category of Information Technology Enabled Services (ITES).
The imposition of a five percent VAT for ISPAB internet and 15 percent VAT for ITC, IIG and NTTN sectors of the value chain has created complexities in this sector, said ISPAB President MA Hakim, adding, "If the government does not resolve the VAT complications in the internet sector, by July, we may also have to shut the service for an hour to draw the attention of the government."
"We will fix a schedule to shut the services for an hour after talking with member companies," he added.
Mentioning that the internet is no longer a luxury service and that it has become an essential part of our life at present, Hakim said, "In the time of the pandemic, we are now seeing how everything – from education to office work – is running through the internet. In every sector, the internet plays a very important role now."
"However, our demands are not reflected in the new budget," he said. "For the first time in the fiscal year 2018-2019, the government imposed a 15 percent VAT on value chain services – which created complications for the internet sector," he said.
"At that time, under the leadership of the then-finance minister AMA Muhith, a meeting was held in the presence of the telecommunications minister, the NBR chairman and the BTRC chairman. The meeting decided to impose five percent VAT on every level of the value chain," he continued.
"However, the government, in the latest budget, has imposed 15 percent VAT on different value chain services once again. We fear if the VAT is not withdrawn, the internet price may go up by 30-40 percent during the current pandemic," he further added.
ISPAB General Secretary Imdadul Haque said internet service providers might have to compromise with quality if they cannot increase the price at consumer level. "However, we do not want to affect the quality of service," he said.
When contacted, ICT and telecommunications expert Sumon Ahmed Sabir told The Business Standard, "Amid the pandemic situation, when everyone's financial situation is getting poor, the government should decrease VAT on value chain services. The imposition of taxes on these services will increase pressure on service providers, which will ultimately affect the consumers."
As per the current policy, it is very usual to raise the price of internet at the consumer level, he argued.
"Internet service providers now have to pay almost 20 percent VAT from where they will not get any rebate. If government imposes 15 percent VAT at both levels, pressure on the consumers can be reduced to some extent," he said.