Business leaders of technology sector will not ask for incentives if they get 3 benefits

The businessmen in IT sector want to achieve self-sufficiency with policy support, not just periodic blessings from governments. Leaders in the sector said they would not want any more favors, only if the government prefers the facilities in domestic technology companies over the technology imported from foreign companies; only if the government could ensure developing sufficient top and middle-level skilled human resources for the industry; and reduce costs and ease of doing business.

They expressed their thought about the facilities at the post-budget joint press conference held at BASIS Conference Center on Sunday. They said, there is no alternative to using technology to make every sector smarter. They applauded the extension of the tax holiday period of ITES services by three years to include new technologies. However, they have objected to the exclusion of seven items from the previous list.

BASIS president Russell T. Ahmed expects to increase the tax holiday period from three years to five years by demanding that web hosting and cloud services be included in ITES services to save foreign exchange. 

However, BACCO president Wahid Sharif questioned the demand for extension till 2031, on what grounds the export income in ICT will decrease due to the exclusion of sectors like medical transcription. Agreeing with his words, BASIS president said, we need this opportunity to achieve our own capabilities. Foreign investment will come if you get this benefit. Brain drain will decrease.

Russell T Ahmed also said, “Currently, only 10% of the country's cloud service and web hosting market of $ 20 million is in the hands of domestic entrepreneurs. Newly bringing it under tax will discourage domestic entrepreneurs. As the local market for web hosting and cloud services is going to grow, it is necessary to keep these two sectors under tax exemption to encourage Bangladeshi IT and service companies. Investors in hi-tech parks may lose their current duty-free benefits and face a 1% import duty on almost all categories of capital equipment. It is requested to reconsider and maintain the current duty-free facility for investors in hi-tech parks.

BACCO President Waheed Sharif said that tax holiday have been removed from sectors such as cloud services, IT process outsourcing, medical transcription, search engine optimization, system integration and NTTN services in the budget. As a result, there will be a negative impact on the IT industry. On the other hand, the cost of mobile internet services will increase as the supplementary duty is proposed to increase by 5 percent on services provided through the use of mobile SIM cards. Smart Bangladesh cannot be achieved without mobile internet and expansion of internet at the marginal level.”

Ambareen Reza, referring to the impact on web hosting, cloud, and e-commerce, said, "We are demanding that the government give incentives to payment from cashless, tax exemption on e-learning and remove TDS from small and cottage entrepreneurs”.

She also said, “The current VAT in the logistics sector needs to be withdrawn to expand e-commerce and smart logistics services. Because this creates a price difference between the products and services sold online and the products and services of conventional stores. In this way, online product service entrepreneurs do not get a level playing field. Therefore, according to the proposal of e-CAB, VAT is withdrawn in the case of companies that deliver their own goods and services. And companies that provide these services to third parties may incur a minimum VAT of 5%. Demand to provide minimum two percent cash incentive equivalent to payment charges in this sector to encourage digital payments. It is logical to call for payment gateway charges not to be included in the list of tax deductions at source.”

ISPB president Imdadul Haque said that the ISPs are 100% local institutions. They were not included in ITES for the third time to ensure their growth. It is disappointing. Broadband penetration in the country is now 10 percent. This rate will be increased to 60 percent in Smart Bangladesh implementation.

He claimed that the expansion of Internet services and the creation of Smart Bangladesh from Digital Bangladesh will be hindered by not reducing the current 10% VAT and duty on broadband internet service providers (AIT) and 37% on OLT and all materials used in the information technology sector.