POST TIME: 22 June, 2018 00:00 00 AM
VAT on internet to be slashed by 5pc from July 1

VAT on internet to be slashed by 5pc from July 1

The value added tax (VAT) on using internet will be reduced by about 5 per cent at the end user level, which will be effective from July 01, 2018. The assurance came from a meeting between Finance Minister AMA Muhith and Telecom and ICT Minister Mustafa Jabbar yesterday.

The current VAT on internet usage is 15 per cent and it will be reduced to 10 per cent following the VAT cut. Chairman of National Board of Revenue (NBR) Md Mosharraf Hossain Bhuiyan and Bangladesh Association of Software and Information Services (BASIS) President Syed Almas Kabir were also present at the meeting held at the Economic Relations Division (ERD) office of the Ministry of Finance.

Talking to The Independent, Telecom and ICT Minister Mustafa Jabbar said they have solved all the problems in the IT and telecom sector and fulfilled all the demands of the industry.

He said the finance minister would declare the changes in parliament and the new announcement would encourage specially the young people of the country.

The ICT Minister further said the meeting also resolved problems of those who are assembling mobile telephone sets locally.

“We are happy with our achievements,” he said after the meeting.

The trade bodies of digital services have been urging the government to withdraw VAT for the last seven years but are yet to find any positive response from the policymakers. At present there is 15 per cent VAT for using internet through internet service provider’s connection and 21.75 per cent VAT and duty for use through mobile phones, which will come down to 10 per cent and 16.75 per cent respectively after the VAT cut in July.

But 5 per cent supplementary duty and 1 per cent surcharge will remain same on top of the VAT for mobile internet use, said Syed Almas Kabir. There is no supplementary duty or surcharge on internet use from internet service providers’ connections.

Industry insiders said the government now earns about Tk 1,100 crore from VAT on internet, adding that if the government sacrifices this amount for two years, the boost would allow this sector to fetch Tk 5,000 crore every year.