The business leaders of the national trade organizations related to this sector expressed gratitude and thanks to the Prime Minister Sheikh Hasina for extending the tax exemption period of the information and communication technology sector by three years in the budget of the fiscal year 2024-2025 announced by the government on behalf of the entrepreneurs of the entire information technology sector. Besides, they said policy support is needed now to achieve self-reliance in this sector.
A joint initiative of Bangladesh Association of Software and Information Services (BASIS), Bangladesh Computer Society (BCS), Bangladesh Association of Contact Centers and Outsourcing (BACCO), Internet Service Providers Association (ISPAB) and E-Commerce Association of Bangladesh (E-CAB). On 09 June 2024 Sunday, a press conference was held at Kauranbazar Basis Auditorium in Dhaka.
In the press briefing, BASIS President Russell T Ahmed, BACCO President Waheed Sharif, ISPAB President Md Imdadul Haque and E-CAB Vice President Syeda Ambarin Reza presented the budget response on behalf of their respective associations and answered various budget related questions from the media representatives.
Basis president Russell T Ahmed said in his speech, keeping in mind the budget proposal of BASIS and with the belief of building a smart Bangladesh, I would like to express my sincere thanks to Honorable Prime Minister Sheikh Hasina for extending the tax exemption period of information technology sector by three years. This tax exemption will not only contribute to the development of information technology sector, but it will play the role of nucleus in various fields including education, health care, agriculture, banking system, export-oriented manufacturing industry in building a smart Bangladesh. Which is closely related to the Fourth Industrial Revolution and we expect to usher in a new wave of technological development and innovation in various sectors of the knowledge-based cashless economy.
He also said that currently only 10% of the country’s cloud service and web hosting market of USD 20 million is in the hands of domestic entrepreneurs. Newly bringing it under tax will discourage domestic entrepreneurs. As the local market for web hosting and cloud services is going to grow, it is necessary to keep these two sectors under tax exemption to encourage Bangladeshi IT and service companies. Besides, investors in hi-tech parks may lose their current duty-free benefits and face 1% import duty on almost all categories of capital equipment. It is requested to reconsider and maintain the current duty-free facility for investors in hi-tech parks.
BACCO President Waheed Sharif said tax exemption in the IT sector will undoubtedly contribute directly to technological development, innovation and creation of new entrepreneurs. Besides, it will make an important contribution to various export-oriented industries including education system, health care, banking system. As a result, employment will be created on the one hand, and a large amount of foreign currency will be earned. We believe that it will accelerate the country’s economy.
He also said, on the other hand, in the budget, tax exemptions have been removed from sectors like cloud services, IT process outsourcing, medical transcription, search engine optimization, system integration and NTTN services. As a result, there will be a negative impact on the IT industry. On the other hand, the cost of mobile internet services will increase as the supplementary duty is proposed to increase by 5 percent on services provided through the use of mobile SIM cards. It is not possible to achieve smart Bangladesh without mobile internet and expansion of internet at marginal level.
ISPAB President Md. Imdadul Haque said that despite the instructions of the Prime Minister in the proposed budget for the financial year 2024-25 for the desired development of the information technology service sector, not including all the services of the ISP institutions in ITES, 10% on broadband internet service providers (AIT) and currently 37 on ONU, OLT. The ISP Association feels that the expansion of Internet services and the creation of Smart Bangladesh from Digital Bangladesh will be hampered by not reducing the % imposed VAT and duties and duties on all materials used in the IT sector.
On behalf of ISP Association of Bangladesh, I am expressing a strong reaction against such a retrograde decision. At the same time, to ensure the best use of the Internet and to remove the obstacles, I strongly demand the inclusion of ITES in all the services of the ISP institutions in the revised budget of 2024-25. Moreover, I demand withdrawal of 10% (AIT) on broadband internet service providers and 37.% VAT and duty on ONU, OLT and duty on all materials used in information technology sector.
Syeda Ambarin Reza, Vice President of E-CAB, said that in the implementation of Smart Bangladesh, the existing benefits of IT and ITIS sector should be maintained and the supporting sector should also be developed. Because sometimes the growth of the main industry is hindered due to the support industry. One of the supporting sectors of the digital industry is website hosting and cloud services. Currently, this sector of the country is still dependent on foreign services. Tax exemptions will play a very important role in the coming years to ensure competitive prices and services for the development of domestic services in this sector. Another subsidiary and integrated sector is the logistics sector. The existing VAT in the logistics sector needs to be withdrawn to expand e-commerce and smart logistics services. Because this creates a price difference between the products and services sold online and the products and services of conventional stores. In this way, online product service entrepreneurs do not get a level playing field. Therefore, according to the proposal of e-cab, VAT is withdrawn in the case of companies that deliver their own goods and services. And companies that provide these services to third parties may incur a minimum VAT of 5%.
He further said, to encourage digital payments, we demand to provide a minimum two percent cash incentive equivalent to payment charges in this sector. As banks and financial institutions deduct the payment charges and the remaining amount is returned to the e-commerce and IT platforms, there is no scope for tax deduction at source. In this situation, it is a logical call to not include the payment gateway charges in the Non-TDS deduction list.