Mobile banking operators to pay higher corporate tax

Mobile Financial Service (MFS) providers will have to pay as high as 40% corporate tax from the forthcoming financial year. But listed companies may get a 2.5% tax cut. 

By increasing the tax rate, the government will bring the MFS providers into the category of banks, insurance companies and other financial organisations that have been paying 40% tax. 

Presently, the tax rate for mobile banking operators is 32.5%.

"If the proposal is endorsed, the size of the formal economy will get bigger, and investment and revenue collection will rise," said Finance Minister AHM Mustafa Kamal during his budget speech on Thursday. 

He also proposed increasing the individual transaction limit to Tk200,000 from Tk75,000 for the purchase of essential food items and medicines through mobile banking. 

Syed Almas Kabir, president of the Bangladesh Association of Software and Information Services, said the tax hike would increase the cost of digital transactions through mobile banking. 

"We urged the government to withdraw VAT from digital transactions through the platforms. But the government did not do that. Instead, it wants to increase the corporate tax which will be counterproductive." 

General people will have to bear the additional cost if the tax increases, Kabir added.  

On 31 March 2011, Dutch Bangla Bank first introduced mobile financial service named Rocket to take banking services to the country's huge population.

Later, other banks started using the technology to ease the process of transferring money for rural and marginalised people.

As of March, the number of active MFS accounts is 3.46 crore, according to Bangladesh Bank data.

Currently, there are 15 mobile banking service providers in the country. Around Tk2,000crore is transacted a month using the platforms.