The Ministry of Finance on Wednesday issued a circular waiving all additional value added taxes (VAT) above 5 percent in International Terrestrial Cable (ITC), Internet Gateway (IIG) and Nationwide Telecommunication Transmission Network (NTTN) for internet services.
Service providers have been demanding the waiver for a long time, and this move will ease the VAT burden on them.
Recently, as part of their protest, internet service providers threatened a countrywide internet blackout if the government fails to meet their demand. The Finance Ministry came out with the decision nearly one-and-a-half-months after the threat.
The Internet Service Providers Association of Bangladesh (ISPAB) had also been warning that a standoff prompted by the 5 percent VAT on internet and another 15 percent VAT on the value chain could interrupt the service amid hiked internet use during the virus-led situation.
When contacted, ISPAB President Aminul Hakim said, "Reducing VAT will help lessen our cost of product and service. It would be possible to drag down internet charge which will benefit the customers in the end."
The government in 2018 reduced VAT on operator-level bills to 5 percent from 15 percent. But VAT on their raw material remained unchanged.
The providers did not lessen VAT to supply level as 15 percent VAT was effective on several phases including IIG and NTTN. The new circular will resolve the issues.
According to ISPAB, currently 80 lakh households are using cable linked connections while an estimated 3 crore people are using broadband internet.