IT sector calls for policy support to build Smart Bangladesh
DHAKA, BANGLADESH — Information and communication technology (ICT) industry stakeholders believe that additional policy support is essential to achieving self-sufficiency and building a Smart Bangladesh.
Although the Bangladeshi government has already announced a three-year tax exemption for the ICT sector in the proposed national budget for FY2024-25, stakeholders argue that this measure alone is insufficient.
Industry leaders voice concerns
Leaders from the 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) held a press conference to express their reactions to the budget.
BASIS President Russell Ahmed highlighted the need for a longer tax exemption period, stating that the tax exemption period of the IT sector would have been better if it was five years.
Ahmed explained that this extension would not only aid the development of the IT sector but also play a crucial role in various fields such as education, healthcare, agriculture, banking, and export-oriented manufacturing industries, all of which are integral to building a Smart Bangladesh linked to the Fourth Industrial Revolution.
Call for comprehensive policy support
Ahmed also pointed out that only 10% of the country’s $20 million cloud services and web hosting markets are currently controlled by domestic entrepreneurs. He warned that newly imposed taxes on these services would discourage local entrepreneurs.
“As the local market for web hosting and cloud services is set to grow, it is necessary to keep these two sectors under tax exemption to encourage Bangladeshi IT and service companies,” he added.
He also raised concerns about the potential loss of duty-free benefits for investors in hi-tech parks, who may face a 1% 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 urged.
Impact on mobile internet and broadband services
BACCO President Wahid Sharif noted that the budget has removed tax exemptions from several sectors, including cloud services, IT process outsourcing, medical transcription, system integration, search engine optimization, and Nationwide Telecommunication Transmission Network (NTTN) services. He warned that this would negatively impact the IT industry.
Additionally, the proposed 5% increase in supplementary duty on mobile internet services would raise costs, hindering the expansion of internet access, which is vital for achieving Smart Bangladesh.
ISPAB President Emdadul Hoque criticized the lack of inclusion of all internet service provider (ISP) services in Information Technology Enabled Services (ITES) and the imposition of a 10% AIT on broadband internet service providers.
He also highlighted the 37% VAT and duties on ONU and OLT, stating, “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.”
Demand for incentives and VAT reduction
e-CAB Vice-President Ambareen Reza called for a minimum 2% cash incentive to encourage digital payments and special attention to cashless initiatives in the education and medical sectors.
“This will facilitate building Smart Bangladesh at the overall level,” Reza added.