The revenue board has strongly opposed the government's decision to waive the tax on SIMs used in MNP service.
Reduction of SIM tax for mobile number portability (MNP) service may create the scope for evasion of VAT worth Tk 0.5 billion a year, the National Board of Revenue (NBR) said in a letter sent to the Ministry of Finance recently.
It said to check tax evasion, NBR and the Bangladesh Telecommunication Regulatory Commission (BTRC) need to know which SIM cards the subscribers are changing through obtaining MNP service.
The NBR said the Tk 50 charge for MNP service can be waived instead of giving tax exemption.
The government introduced MNP service in the country in October. After its introduction, the government took decision to reduce its service charge to Tk 57.50 from Tk 157.50.
The government has also taken steps to waive Tk 100 SIM replacement tax for MNP subscribers. However, it is yet to come into force.
Officials said NBR will have to issue a statutory regulatory order (SRO) by waiving the VAT before reduction of MNP service cost.
They also said NBR has sent a draft SRO regarding this matter to the Ministry of Law for its vetting.
The MNP service enables customers to switch to different operators without changing their existing mobile phone numbers.
"There is no such charge on MNP service in the neighbouring countries like India and Pakistan," said the NBR proposal.
It is assumed that all of the subscribers will not take the MNP service, as it depends on their choice. In many other countries, some 6.0 to 10 per cent subscribers avail the service, it noted.
There should be scopes to verify authenticity of SIM replacement to check evasion of the payable VAT, it added.
The tax-related disputes between the telecom operators and the NBR may worsen further following the exemption, officials opined.
Two cases relating to SIM card replacement issues involving Tk 24.9 billion and Tk 8.24 billion VAT respectively have remained pending in the court for a long time, NBR mentioned in its proposal.
The process of information collection on replaced SIM is a complex one, it said.
It took a long time to finalise the actual tax demand on SIM replacement, posing a threat to revenue collection, NBR added.
Currently, all the telecom operators have to pay Tk 100 as SIM replacement tax.
Recently, allegations were made against GrameenPhone officials of selling 1.8 million SIMs illegally in absence of approval of the government's agencies concerned.
Officials said the MoF approved a proposal of the Ministry of Posts, Telecommunications and Information Technology to reduce SIM tax for MNP service.
Bangladesh is the 72nd country in the world to introduce the service.
Infozillion Teletech BD Limited, a consortium of Bangladesh and Slovenia, received the license for providing the service.
Some 70,000 subscribers, out of a total of 140 million, have obtained MNP service so far.
Telecom operators said they are now providing subsidized MNP service.
For example, Robi is paying Tk 150 to Infozillion, while it is receiving Tk 99 as service charge from mobile phone subscribers.
Also, it is paying Tk 100 SIM tax on behalf of the subscribers, said officials.
The telecom operators also expressed their doubt over getting significant response of the subscribers for availing MNP service.
