A recent GSMA report reveals that Bangladeshi citizens are burdened with some of the highest internet taxes in Asia, with a combined tax rate of 39 percent on internet services. The report highlights that 21 percent of this tax comes from sector-specific taxes, while 18 percent is VAT. This high tax rate is seen as a significant barrier to the country’s digital transformation, exacerbating the digital divide.
According to the GSMA report titled “Enabling Mobile Network Investment: Policy Reforms for Bangladesh,” Bangladesh’s internet tax rate is much higher than that of its regional neighbors. Nepal imposes a 26 percent tax, Sri Lanka 23 percent, India 18 percent, the Philippines 12 percent, and Indonesia 11 percent.
The report also outlines additional financial challenges for Bangladesh’s telecom sector. Publicly traded telecom companies face a corporate income tax rate of 40 percent, while non-publicly traded companies are taxed at 45 percent, both significantly higher than in India and comparable to industries like tobacco. Furthermore, telecom operators are subject to a 2 percent minimum turnover tax, much higher than the 0.6 percent applied to other sectors.
The lack of a credit mechanism for input taxes further increases operational costs for telecom companies. The Bangladesh Telecommunication Regulatory Commission does not register operators for VAT, resulting in an additional 7.5 percent cost for these companies.
The GSMA report underscores that Bangladesh is at a crucial stage in its ambition to become a trillion-dollar economy and achieve developed nation status. The telecom sector is a critical enabler of this transformation, driving economic growth, innovation, and digital inclusion. However, the high taxes and regulatory challenges are hindering the sector’s potential.
Key obstacles identified include a complex licensing framework, restrictions on infrastructure ownership and sharing, and short licence durations that complicate long-term investment planning. The report calls for reforms to create a more attractive business environment, including streamlining licensing processes, reducing sector-specific taxes, and aligning corporate taxes with other industries.
Additionally, the report recommends establishing a progressive regulatory framework with market-driven regulations, improving transparency, and ensuring regulatory stability. The report also urges collaboration among government bodies, telecom operators, and investors to build a future-ready telecom ecosystem.
The GSMA concludes that by addressing these challenges, Bangladesh can unlock the full potential of its telecom sector, supporting the nation’s journey to a developed and digitally inclusive economy.
