Mobile phone makers seek tax break extension as of 2025

Tax breaks provided by the government to mobile phone industries have paid off, claimed businesses on Sunday, calling for extending the facility as of 2025.

"At present, we fulfil 85% of the local demand for smartphones," Md Mesbah Uddin, president at Bangladesh Mobile Phone Industries Owners Association, at a pre-budget parley with the National Board of Revenue (NBR).

NBR Chairman Abu Hena Md Rahmatul Muneem presided over the discussion at its Segunbagicha headquarters keeping in view the budget for fiscal 2022-23.

Md Mesbah Uddin said currently 14 companies manufacture mobile phones in the country.

Thanks to the benefits offered by the NBR last year, he said, the manufacturers now meet over 50% of the local demand for feature phones. The rate will rise to 75% by the end of this year, he hoped.

Mobile phone manufacturers pay a duty of 1-15% on raw material imports, compared to a staggering 57% for bringing in mobile phone sets.

In addition, mobile phone manufacturing units in hi-tech parks enjoy a tax holiday for up to 10 years.

At the discussion, Walton Group also called for continuing the existing facilities provided by the government to the local industry.

At the same time, Issa Mainuddin, executive director at the Bangladesh Association of Software and Information Services (BASIS), proposed increasing the tax exemption facility for investment in the IT sector from 2025 to 2030.

He said many foreign investors backed away from the investment decision after hearing of this facility till 2025. He said a decision should be taken now to bring in investments.

In his turn, the NBR chairman said it will not be possible for the government to sustain the existing facilities for the local industry in the long run.

"After Bangladesh's graduation from a least developed country in 2026, we will be compelled to gradually lift various types of policy support given to local industries," he said.

"For this, it is necessary to prevent foreign products with quality and competitive prices. And you (local industrialists) have to do this," added Abu Hena Md Rahmatul Muneem.

He expressed his resentment at various local industries that could not perform at an expected level even after receiving policy support.  

In the discussion, local entrepreneurs in the electric and electronics sector as well as importers and local traders placed their various demands and sought redresses in the budget.

The representatives of the local traders also pointed out the existing excessive value-added tax (VAT) rate at the trading stage and demanded a solution from the NBR.

Khandaker Ruhul Amin, a representative of the electrical merchants association, said there are five lakh traders in this sector in the country. The NBR demands Tk1 lakh in VAT for sales of Tk10 lakh. In such a situation, the traders prefer reporting fewer sales and managing NBR officers.

At the time, in response to the statements by other businessmen, the NBR chairman said, "You have taken advantage and you have spoiled our people. Now you are raising your voice."

In a separate discussion in the morning, representatives of the automobile and transport sectors presented their proposals.