A budget for building a Smart Bangladesh?
Some major enablers find themselves subjected to increased taxation, as noted by individuals within relevant sectors. The stakeholders also pointed out some challenges posed by the budget proposal.
The proposed budget for the upcoming fiscal year highlights the Smart Bangladesh mission prominently in the headline, reflecting a strong emphasis on this vision in the finance minister's budget speech. The budget also offers incentives to various stakeholders involved in enabling this mission.
However, some major enablers find themselves subjected to increased taxation, as noted by individuals within relevant sectors. The stakeholders also pointed out some challenges posed by the budget proposal.
For example, Md Muiz Tasnim Taqui, a director at the global accounting firm Deloitte, highlighted that the government is encouraging a cashless society by providing a 2.5% reduction in corporate tax for private companies, on condition of annual cash transactions under Tk36 lakh. However, due to limited technology adoption, many companies may not be able to benefit from this.
He said the budget should have placed greater emphasis on expediting the development of the enabling environment towards a Smart Bangladesh.
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A proactive push could improve tax transparency within the economy. Additionally, with accelerated technology adoption, there is potential for greater acceptance of cashless transactions among the populace, thereby incentivising companies to transition in that direction, he added.
The budget proposed to raise the supplementary duty on mobile phone services from 15% to 20%.
Responding to the proposed budget, the Association of Mobile Operators Bangladesh (AMTOB) expressed concern, stating that the decision will impose additional burdens on the industry and its subscribers. This increase is expected to result in higher costs for voice calls and internet data.
"The financial pressure on users, particularly those from marginalised communities, might lead to decreased mobile service usage," the association said in a statement issued yesterday.
The association opposed the proposal of further taxation on users, arguing that such a measure would position the users as the highest tax-paying telecom consumers in South Asia.
Both the industry and users are concerned that the proposed Tk100 increase in SIM tax will negatively impact phone adoption.
Appreciating the proposals to decrease duty on laptop imports and extend the tax holiday for the ICT sector by three years, stakeholders underscored the importance of widespread and rapid technology adoption to advance the development of a Smart Bangladesh.
Engineer Subrata Sarker, president of Bangladesh Computer Samity, told TBS, "It is crucial to maintain affordability of devices and related services throughout the initial stages of the Smart Bangladesh initiative. The government should review its proposals for heightened taxes and duties."
He further suggested that to boost smartphone penetration, local manufacturing should retain certain duty incentives.
The Bangladesh Association of Software and Information Services (BASIS) appreciated the three-year extension of tax holidays for ICT-related services but advocated for its extension to five years.
Russell T Ahmed, president of BASIS, said the ICT sector would serve as the core of the endeavour towards achieving a $50 billion digital economy by 2041.
To facilitate this goal, he emphasised the necessity of reinstating the tax holiday benefit for various services, including cloud services, system integration, overseas medical transcription, search engine optimisation, web hosting, IT process outsourcing, and nationwide telecommunication transmission networks.
He also urged the government to reconsider the move to impose a 1% duty on capital machinery imported by the firms at the Hi-Tech Parks.
"As the country needs huge tech investments, we request the government to work with the industry in a coordinated manner to reach the goal," Russell added.
The Metropolitan Chamber of Commerce and Industry (MCCI) commended the budget proposal for its inclusion of initiatives such as Cashless Bangladesh, Digital Bank and Credit Scoring System, and Digital Land Management. However, it emphasised the importance of effectively automating the tax collection ecosystem.
The e-Commerce Association of Bangladesh called upon the government to exempt the digital commerce sector from income tax, citing its role in fostering the growth of approximately 200,000 young entrepreneurs and generating over 500,000 jobs.
The digital commerce sector presented several demands, including the establishment of a central authority for digital commerce, tax and duty incentives for the smart logistics sector, cash incentives for cashless transactions, and the reinstatement of tax holidays for certain ICT sub-sectors that were excluded from the proposed extension of the tax holidays budget.
