The Financial Express

Double-layer VAT on internet services: ISPAB considers legal battle or raising charges as options

| Updated: July 11, 2020 21:12:19

Picture used for illustrative purpose only — Collected Picture used for illustrative purpose only — Collected

The Internet Service Providers Association of Bangladesh (ISPAB) would go for a legal battle over imposition of a double-layer VAT on their services if no solution comes from the NBR soon.

It was also considering to increase internet charges at the end users' level as an alternative option.

"We will file a writ petition once the court opens," ISPAB President Md Aminul Hakim told The Financial Express.

He said the association is preparing to file a writ petition against the National Board of Revenue (NBR) challenging the imposition of the double-layer Value Added Tax (VAT) on their services.

The association also served a legal notice to the NBR at the end of last month over imposition of 5 percent and 15 per cent VAT on their services. However, he said, they did not get any response from the NBR yet.

"I met with the NBR member (VAT) on Tuesday last. He suggested me to wait until August next," Mr. Hakim said, adding that the ISPAB is still thinking about going to court for a solution before August.

On July 04, the ISPAB threatened to suspend services for "two to three hours" across the country if the double-layer VAT is not revised by this month.

It said 5 per cent and 15 per cent VAT on internet service pushed their cost upby around 30 per cent.

Mr Hakim said they have no alternative to increase user-level charges if the VAT policy is not revised.

"We have no intention to increase fees as internet is now a basic need for the people. But, we will have to increase charges if the government doesn't listen to us," he added.

"If the government does not fulfill our logical demand, we will have no other way but to consider increasing charges and that could be 30-40 per cent."

It means, Mr Hakim said, the users who are now enjoying a TK 1,000 package, which is most popular, will have to pay TK 1,300 after August.

He also said that they will wait for a call from the government until July and then will move on with their decision after discussing the issue with the members.

The ISPAB said that suspension of internet services for one or two hours every week could be one of the options, which would continue until their demand is met.

Currently, the internet service providers are collecting 5.0 per cent VAT from the end users but they have to pay 15 per cent VAT in two layers for purchasing wholesale bandwidth and connectivity.

As the VAT rates are different, they are not getting rebate from the NBR.

The ISPAB said the government should withdraw VAT on all segments or make it 15 per cent at all levels. They also sought the Prime Minister's intervention in resolving the VAT complexities.

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