Why Does Bangladesh Have One of Asia’s Highest Internet Tax Rates?

GSMA reported that Bangladesh has the highest combined Internet taxes in Asia at 39 percent making digital provision expensive and widening the digital divide. This includes 21 percent in the tax specific sector and 18 percent in VAT. 

Other countries’ taxation policies are like Nepal – 26 percent, Sri Lanka – 23 percent, India – 18 percent, Philippines – 12 percent while Indonesia levies just 11 percent. 

Source: The Daily Star

Furthermore, the report stated that a 40 percent corporate tax is charged for publicly traded companies while 45 percent is charged for non-publicly traded companies making it a lot higher when contrasted with the rates charged in neighbouring countries. 

Payment of the minimum turnover tax for telecom operators is much more than that of other sectors at 2 percent, it is several times greater than 0.6 percent of turnover levied on all other industries without any credit mechanism for input taxes. 

Source: GSMA

Also, VAT is not registered by the Bangladesh Telecommunication Regulatory Commission adding another 7.5 percent stopping its ability to register for input VAT. All the taxes hit profitability and hinder investment for expansion of the networks. The report warns that those combined regulatory and fiscal challenges are the ones preventing the country from realizing its digital transformation and economic growth. 

Greater friendliness towards investment is required for embedding Bangladesh’s ambition to become a trillion-dollar economy via the internet sector. Otherwise, without reforms high taxation will continue to stall digital inclusion and the growth of the telecom sector making it extremely difficult for Bangladesh to compete with regional peers in the digital century.