Electronics to Endure Elevated VAT in Upcoming Budget
In the upcoming fiscal year, the rate of Value Added Tax (VAT) on mobile talk time, SIM cards, and internet services will remain unchanged, according to sources familiar with the interim government’s budget proposal. However, VAT on electronics—including televisions, refrigerators, and motorcycles—is expected to double. The interim government is scheduled to present its budget on June 2.
In advance of the announcement, top officials of the National Board of Revenue (NBR) are set to meet with Chief Adviser Professor Dr. Muhammad Yunus on May 19 to finalize the details of the proposed tax measures.
According to insiders, the current tax burden on mobile services, including supplementary duty, VAT, and surcharges, exceeds 39 percent as per last year’s budget. In response, the Association of Mobile Telecom Operators of Bangladesh (AMTOB) has recommended reducing the supplementary duty to 20 percent and eliminating the 1 percent surcharge in the new budget. Similarly, the Internet Service Providers Association of Bangladesh (ISPAB) has demanded the inclusion of broadband services under the Information Technology Enabled Services (ITES) category and the removal of the Advance Income Tax (AIT).
Though no final decision has been made regarding these proposals, a VAT official—who wished to remain anonymous—confirmed that the government does not intend to increase the existing levies on mobile services. “We already increased VAT on mobile services in the last budget. There will be no additional burdens this year,” the official said. “The tax burden will remain as it was on sectors that experienced hikes last year.”
Conversely, the VAT on electronics such as air conditioners, refrigerators, and automobiles, which stood at 5 percent up to the 2023–24 fiscal year and was raised to 7.5 percent in the current year, is now set to increase to 15 percent.
An NBR senior official, speaking on condition of anonymity, noted, “Currently, due to SRO (Statutory Regulatory Order) benefits, the VAT on refrigerators and air conditioners is only 7.5 percent. That SRO is expiring this fiscal year. To boost revenue, ensure a level playing field, and gradually reduce reliance on tax exemptions, the government is not inclined to extend this benefit.”
In the current fiscal year, VAT on mobile talk time and internet services was increased by 5 percentage points to 20 percent. Additionally, the VAT on SIM card sales was raised from BDT 200 to BDT 300. A January proposal to hike the supplementary duty on mobile SIM and recharge-based services (talk time and internet usage) from 20 to 23 percent was ultimately shelved.
