Although the government has announced tax exemption for the information and communication technology sector for three years in the proposed national budget for FY2024-25, stakeholders feel that there is a need for policy support to achieve self-sufficiency.
Bangladesh Association of Software and Information Services (BASIS), Bangladesh Computer Samiti (BCS), Bangladesh Association of Contact Center and Outsourcing (BACCO), Internet Service Providers Association of Bangladesh (ISPAB) and e-Commerce Association of Bangladesh (e-CAB) leaders made such remark about the budget reaction in a press conference held at BASIS auditorium in Dhaka’s Karwan Bazar on Sunday.
Talking about policy support, BASIS President Russell T Ahmed said that the tax exemption period of the IT sector has been extended by three years. But it would have been better if it was five years.
It will not only contribute to the development of the information technology sector, but it also will play the role of the nucleus in various fields including education, health care, agriculture, banking system, and export-oriented manufacturing industries in building a smart Bangladesh which is closely linked to the Fourth Industrial Revolution, he said.
Saying they need more policy support from the government, he added, “Currently, only 10 per cent of the country's $20 million cloud services and web hosting markets are 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 are 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 a 1 per cent import duty on almost all categories of capital equipment. We call for this to be reconsidered and the existing duty-free facility for investors in hi-tech parks maintained," he added.
Russell also said that the definition of incentives for cashless transactions is not clear. “We will talk to NBR about it.”
BACCO President Wahid Sharif said that the budget has removed tax exemptions from sectors such as cloud services, IT process outsourcing, medical transcription, system integration, search engine optimisation and NTTN services. This will have a negative impact on the IT industry.
On the other hand, the mobile internet services cost will increase as the supplementary duty is proposed to increase by 5 per cent on services provided through the use of mobile SIM cards. Achieving Smart Bangladesh is not possible without mobile internet and expansion of internet at the marginal level, he said.
ISPAB President Md Emdadul Hoque said that no inclusion of all services of ISPs in Information Technology Enabled Service (ITES) despite the prime minister's directive for the development of the IT services sector, 10 per cent AIT on broadband internet service providers and currently 37 per cent VAT and duties imposed on ONU, OLT. Non-reduction of duties on all materials used in the IT sector will hamper the expansion of internet services and the creation of Smart Bangladesh from Digital Bangladesh.
“So, we demand the withdrawal of imposed VAT and duty on all materials used in the IT sector,” he said.
e-CAB Vice-President Ambareen Reza said, “To encourage digital payment, we demand to provide a minimum 2 per cent cash incentive equal to the payment charge in this sector. Also, special attention should be given to cashless initiatives in education and medical sectors which will facilitate building Smart Bangladesh at the overall level.”
