With the current financial year, the tax holiday facility for the tech sector ends in July. Therefore, in the upcoming supplementary budget of Smart Bangladesh, 5 merchant organizations of this sector have demanded seven more years of tax exemption to earn foreign currency from this potential sector. Speakers said that this demand is to consider the national interest instead of implementing the IMF’s prescription.
This demand was made at a press conference held at the BASIS Auditorium in Karwanbazar on Thursday.
This press conference was held on the joint initiative of Bangladesh Association of Software and Information Services (BASIS), Bangladesh Computer Samity (BCS), Bangladesh Association of Contact Center and Outsourcing (BACCO), Internet Service Providers Association (ISPAB) and E-Commerce Association of Bangladesh (e-CAB).
Basis President Russell T Ahmed, BCS President Subrata Sarkar, BACCO President Waheed Sharif, ISPAB President Md Imdadul Haque and e-CAB Senior Vice President Mohammad Sahab Uddin were present and expressed their views on behalf of their respective associations.
Apart from the leaders of the organizations, BASIS former president Fahim Mashroor said, if we are given incentives and bank loans or investment opportunities like the development of the garment industry, then we do not need tax holidays.
In the meeting BASIS President said that currently the annual domestic market size of software and information technology services sector is equivalent to about 1.5 billion US dollars, while exports have reached about 1.9 billion US dollars. In implementing ‘Smart Vision 2041’ Bangladesh, achieving the government’s target of US$ 5 billion in export income from the IT sector by 2029, building world-class capacity in the IT industry, ensuring foreign exchange reserves, encouraging the domestic IT sector, and gradually increasing the domestic market at the time. In order to meet that demand through the private IT sector and protect the outflow of highly valuable foreign exchange, it is imperative to maintain the tax exemption until 2031 to keep the domestic private IT sector competitive in the face of aggressive marketing and market strategies of the foreign IT sector. Therefore, to achieve these goals, the information technology sector should be considered on a priority basis in the budget of the government for the fiscal year 2024-2025.
Subrata Sarkar said that foreign investors invest in the local information technology sector of Bangladesh with long-term plan, in which case the industry has only started to rise as a result of tax exemption. So, I think there is no option to keep this tax exemption in force. Because our hands and feet are caged in the double tax trap. We hope our Prime Minister will consider the matter.
The ISPAB president said that ISPs should be included in ITES despite the directives of the Prime Minister. Besides, in the current competitive internet service, the ISP sector is dependent on imports and in the reality of rising price of dollar, all ISP companies cannot earn 10% on revenue by bearing the cost of internet services. As a result, all ISPs are facing losses due to additional 10% (AIT) tax on internet service bills. I am making a strong demand for abolition of 10% (AIT) on internet services in the next financial year 2024-2025.
BACCO President Waheed Sharif said, “The success that is being observed in the information technology sector at present has been made possible due to the provision of tax exemptions in this sector. Apparently, the government is not getting any revenue from this industry sector. But with huge employment generation in this industry and increasing purchasing power of working professionals, they are contributing significantly to the country’s economy through payment of personal income tax and value added tax. If the tax exemption period is not extended, overall export earnings and new job creation will be disrupted, while new entrepreneurs will lose interest in investing in the industry. As a result, the development of this industry will come to a standstill and a large part of the professionals working in this sector will become unemployed. Therefore, if the tax exemption facility in the IT industry is canceled, the overall economic growth of the country will also be hindered in the future.”
e-CAB Senior Vice President Mohammad Sahab Uddin said, “Technology sector needs special care and facilities for some more time due to changes in technology and other related conditions. Tax exemption is one of them. Through this, the economy will become sustainable and capable. Revoking the exemption now will have a negative impact on this sector. We believe everyone can understand this.”
It was informed in the press conference that on March 10, the leaders of five information technology organizations including BASIS have sent a proposal to Finance Minister Abul Hasan Mahmud Ali demanding the government to extend the period of tax holiday till June 2031. Top IT trade bodies there have written to the finance minister expressing concern that withdrawal of the tax exemption could reduce the sector’s growth, investment and exports. Basically, the government has to do it according to the prescription of IMF. The government also wants to be free from the prescriptions of donor agencies while presenting the budget and the commercial organizations should work to form public opinion on the matter.