Dispute over SIM tax crops up again

The Large Taxpayers Unit of the National Board of Revenue has asked four mobile phone operators to furnish Tk 883 crore to the state coffer as tax on SIM issuance, said officials yesterday.

Between July 2012 and June 2015, with the view to evading the SIM tax, the four operators -- Grameenphone, Robi, Banglalink and Airtel -- issued SIMs to new customers under the guise of issuing replacement SIMs, according to the LTU.

Subsequently, the LTU has demanded Tk 378.95 crore from Grameenphone, Tk 285.20 crore from Robi, Tk 168.91 crore from Banglalink and Tk 50.26 crore from Airtel.

“We have asked them to pay the money within 15 days,” said a senior official of the LTU.

The LTU, which collects average 55 percent of the total VAT in a year, issued the letter on June 29, he said.

The four operators acknowledged the receipt of the letter and also expressed their frustration over the matter.

The letter comes at a time when the four operators are deep in their preparation for the roll-out of 4G services.

“Certainly investors will lose confidence on the regulator after this incident and new investments will also fall into uncertainty,” said TIM Nurul Kabir, secretary general of the Association of Mobile Telecom Operators of Bangladesh.

The NBR's field office claimed the tax after examining data submitted by the operators. A tripartite committee was formed in March to check the authenticity of the replaced SIMs.

The committee gave the four operators until July 10 to present their case. But, before the operators could respond the notice from the NBR arrive.

“This is a violation of the gentleman's agreement that we have,” said a top official of one of the operators.

The mobile operators said the NBR took a similar step just before the 3G spectrum auction in 2013, demanding Tk 3,061.16 crore from them as SIM tax between July 2007 and December 2011.

Due to the dispute the auction had to be rescheduled quite few times.

“The same thing will happen this time as well,” said an official of another mobile operator.

The operators refused to participate in the 3G auction, which prompted the NBR to revise down its claim to Tk 251.21 crore.

“We were ready to pay that amount, but suddenly after the 3G spectrum auction was over the tax authority cheated us,” he said, adding that the NBR revised the amount upwards to Tk 2,048 crore.

The operators challenged the LTU's claim at the High Court, which, in turn, asked the operators to follow process as per the tax law.

Based on the directive, the operators went to Customs, Excise and VAT Appellate Tribunal with their grievance.

The VAT Appellate Tribunal last month gave the verdict in favour of the LTU, instructing the operators to pay Tk 2,048 crore as tax.  About the tribunal's decision, a top executive of a mobile operator said: “What they did is not right. We will definitely go to the High Court and the court will decide the matter.”

“We want to run our business following all the government regulations. But when there were no regulations, we conducted the business our way and now the tax regulator is charging us for that. It is not logical and justified,” he added.

The government has been collecting tax on new SIMs for more than a decade, beginning with Tk 800 for each SIM sold.

Currently, Tk 100 tax is payable for both new and replacement SIMs. But until fiscal 2014-15, no tax was payable for SIM issued to old users as replacement for lost, stolen or damaged SIMs.

And as per a rule framed in 2005, no tax was payable for replacement SIMs on the condition that the operators keep records of replaced SIMs and submit a list of the replaced SIMs along with VAT returns regularly.

“The operators could not prove that they have issued the SIMs as replacement to old users,” the LTU official said.

On the latest verdict of the VAT Appellate Tribunal, LTU VAT Commissioner Matiur Rahman said his office will take steps as per law.

The operators will have to pay tax along with interest and penalty as per the order of the Appellate Tribunal, he added.