Bangladesh waives some VAT on broadband internet services

The government has waived 5 percent additional VAT on services provided by International Terrestrial Cable (ITC), International Internet Gateway (IIG) and Nationwide Telecommunication Transmission Network (NTTN).

Senior Correspondentbdnews24.com
Published : 27 August 2020, 03:45 PM
Updated : 27 August 2020, 03:45 PM

The move means the broadband internet service providers in Bangladesh are now exempt from double-layer value added tax imposed on the sector.

The finance ministry issued a circular on Thursday, more than one and a half months after the Internet Service Providers Association of Bangladesh, or ISPAB, threatened to suspend its services on a limited scale if the VAT-related complications were not solved.

ISPAB had been making the threats for a long time over the differences on VAT rates - 5 percent on internet services and 15 percent on the internet-related value chain services provided by ITC, IIG and NTTN.

It said the differences could have a detrimental effect by driving up the cost of internet services by 30-40 percent in the country.

“The move will help to end VAT-related complications, dropping the overall VAT costs to 15 percent from 35 percent,” ISPAB President MA Hakim told bdnews24.com.

The problem emerged after the government lowered the VAT on internet services provided by ISPs and mobile telecom operators to 5 percent in the budget for FY 2018-19 while imposing a 15 percent VAT on other value chain services.

The National Board of Revenue later revised down the VAT rates to 5 percent for internet and value chain services.

But the crisis resurfaced after the government reinstated the different VAT rates for the two services in the budget for fiscal 2019-20.

A total of eight million customers are using internet connections provided by the ISPAB, while its broadband services have around 35 million subscribers, according to Hakim.