PHOTO: AFP/FILE

MAHMUDUL HASAN

The GSMA, a global association of mobile operators, has urged Bangladesh’s National Board of Revenue (NBR) to withdraw the 7.5 percent VAT imposed on spectrum payments and abolish SIM-related taxes in its proposals for the upcoming FY2026-27 national budget.

In a formal submission addressed to Md Abdur Rahman Khan, secretary of the Internal Resources Division and chairman of the NBR, the GSMA also urged the removal of SIM replacement charges and taxes on IoT (Internet of Things) SIMs.

The global association said its recommendations are aligned with the Bangladesh government’s Vision 2030, which identifies ICT as a priority sector and aims to establish the sector as the country’s leading foreign exchange earner.

Mobile operators in Bangladesh already invest 15-20 percent of their revenues in capital expenditure, the GSMA notes, reflecting the sector’s capital-intensive nature. However, rising regulatory costs are limiting further infrastructure expansion.

Citing GSMA Intelligence data, the association said average revenue per user (ARPU) in Bangladesh grew by just 1.2 percent annually between 2019 and 2024, while average inflation was around 7 percent over the same period.

Bangladesh’s ARPU currently stands at about $1.15 per mobile connection -- among the lowest in the Asia-Pacific region -- compared with $2.37 in India, $2.55 in Indonesia, and $2.81 in the Philippines. In Malaysia and Thailand, ARPU exceeds $7 per connection.

Despite offering some of the region’s lowest mobile data prices, operators in Bangladesh spend 9-12 percent of their annual revenues on spectrum fees.

The GSMA urged the government to withdraw the 7.5 percent VAT on spectrum payments, arguing that spectrum fees are regulatory charges for access to a public resource rather than commercial transactions and therefore should not be taxed under VAT.

It also noted that the VAT is non-rebatable, increasing operators’ effective costs.

The association also criticised the Tk 300 SIM tax, calling it a barrier to digital inclusion, particularly for low-income and rural users.

Citing industry data, the GSMA said active mobile subscribers fell by 10 million (5.1 percent) and mobile internet users by 13.3 million (10.4 percent) between July 2024 and March 2026, suggesting that higher SIM taxes may have discouraged connectivity.

It further argued that taxing SIM replacements is unfair because customers must pay again when replacing lost or damaged SIMs or upgrading technology. The association also opposed applying the same tax to IoT connections.

The GSMA proposed withdrawing taxes on SIM replacements, gradually reducing the SIM tax from Tk 300 to Tk 200 in FY2026-27 before phasing it out completely, and exempting IoT SIMs from taxation.