Bangladesh: Uncertainty looms over 4G/LTE license auction

The Independent Bangladesh  17.07.2017


Doubts have surfaced over the holding of a 4G/LTE licensing auction as the Bangladeshi National Board of Revenue has demanded SIM replacement tax from the four telecoms operators in the country. Grameenphone, Robi, and Banglalink have spent BDT 320 bln on the 3G rollout, having earned a total of BDT 60 bln in the last three years. Banglalink, from March 2007 through June 2011 released 7,210,834 SIM cards in the domestic market. The operator reported those SIMs in the SIM replacement section, and thus evaded VAT worth BDT 5,324,045,000. Up until March 2015, the amount stands at BDT 6.13 bln.


Doubts have surfaced over the holding of 4G licencing auction as National Board of Revenue demanded SIM replacement tax from the four telecom operators, industry insiders said. The operators—Grameenphone, Robi, Banglalink and Airtel—lost the legal battle at the National Board of Revenue’s (NBR) VAT appellate tribunal, which asked the operators on June 5 to pay a total of Tk 2,048 crore within 90 working days, officials said. The NBR has also forwarded fresh notice to the mobile phone operators, demanding Tk 850 crore as SIM replacement tax. According to the fresh notice, the NBR has demanded Tk 850 crore from the four mobile phone operators, alleging that they had dodged the amount as SIM replacement tax between July 2012 and June 2015. The telecom operators said in 2013 that they had written to the government to resolve the problem before holding 3G auction. Following this, the government formed a committee, which found 9–10 per cent irregularities over the disputed SIM replacement. The operators then agreed to pay as per the committee’s directive. A member of the committee told The Independent that the NBR had kept its mum on the issue before the 3G auction, but backtracked to its earlier position after the auction. “Such attitude is a big hurdle in earning the faith of foreign investors,” he said. TIM Nurul Kabir, secretary general of the Association of Mobile Telecom Operators of Bangladesh (AMTOB) and also a member of the committee, told The Independent that Tk 250 crore to Tk 300 crore was claimed at that time as SIM replacement tax. The NBR, however, declined to agree to the amount after the 3G auction, he added. The Large Taxpayers Unit (value added tax) of the NBR maintained that the issue was discussed after noticing the fact that the telecom operators had dodged supplementary duty and value added tax on SIM replacement. Thus, it was not possible to reduce the tax amount, it noted. When asked whether the NBR’s demand will hinder the holding of 4G auction, Nurul Kabir said: “Of course, it will. The investors planning to invest here will not be interested to do so anymore due to such a burden. There was nothing to say if the NBR’s demand was genuine.” “The government is working towards building a digital society. If it is fruitful, Bangladesh will become a role model for third-world countries. The mobile operators have been working with this notion. There is no alternative without 4G service to this effect,” he added. Nurul Kabir also said that it was “illogical” to demand tax after the biometric registration for mobile phones last year. There was no chance for irregularities after biometric registration as the identity of a subscriber was checked with his/her national identity database, he added. As per AMTOB data, Grameenphone, Robi and Banglalink have spent a total of Tk 32,000 crore for 3G roll out. They have earned a total of Tk 6,000 crore in the last three years from 3G services. The return on investment (ROI) is very low though 3G network coverage reached 65 per cent of the population. Only 18 per cent of the subscribers are using 3G service. According to NBR, from July 2009 to December 2011, the largest operator Grameenphone evaded VAT worth of Tk 1 thousand, 23 crore, 23 lakh 31 thousand. The second largest operator Banglalink, from March 2007 to June 2011 released 70 lakh 21 thousand 834 SIMs in the market. The operators showed those SIM as replacement SIM and evaded VAT worth of Tk 532 crore 41 lakh 45 thousand. Up until March 2015, the amount stands at Tk 613 crore. Robi, from March 2007 to June 2011 released a total of 51 lakh 81 thousand 797 SIMs in the market. They evaded VAT worth of Tk 414 crore 54 lakh by showing those SIMs as replacement SIM. NBR from its large tax unit (LTU) issued a demand note in May 18, 2015 to the operator. Airtel from July 2007 to December 2009 evaded VAT worth of Tk 78 crore 78 lakh 24 thousand in the name of SIM replacement. All four operators have lost against their respective appeals.


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