Stakeholders laud information technology-friendly budget
STAFF REPORTER
Terming the budget tech-friendly, the state minister for the Information and Communication Technology (ICT) Division, Junaid Ahmed Palak, said the allocation of Tk. 3,974 crore for his ministrywhich marked a significant jump from the allocation of Tk. 1,819 crore in the last fiscal years revised budgetwas a good enough indication of the governments honest intention of taking the ICT sector into the fast lane.
But thats not all. The highest portion of this years budget was allocated for the education and technology sector. The word technology is being attached to education because the government wants to incorporate technology in every part of our educational system.
Ahmed said, while the value-added tax (VAT) regime has tightened its grip virtually on every sector, the local software industry has got exemption from VAT.
This VAT has been exempted up to June 2019 so that the tech industry can flourish and a competitive local software industry can be created in Bangladesh, said Ahmed.
He said the government has made sure that local companies can get an edge over foreign ones in doing business. The disbursement of Government of Bangladesh (GoB) funds for the local software companies has also been made easy through this budget.
Also, we realise that venture capital is an integral part of tech start-up culture. Thats why the government has exempted venture capital firms from VAT.
The state minister said the time had come for Bangladesh to step into the hardware manufacturing business. To do so, the government has reduced VAT on 94 types of IT machinery and parts required for manufacturing mobile phones, computers, laptops and tabs from 25 per cent to a flat 1 per cent. For three machines and machine parts, the rate has been reduced to 10 per cent from 25 per cent.
Lauding the budget, the Bangladesh Computer Samity (BCS) president Ali Ashfaq noted that the incentives provided in the budget for the IT industry were unprecedented. For successive years, we have sought reductions in VAT and import duty on IT machinery. It has finally been implemented.
Rajib Ahmed, president of the E-Commerce Association of Bangladesh, asked for a block allocation of Tk. 100 crore from the budget for the development of the e-commerce sector. He also sought Tk. 12 crore for research and development of the e-commerce sector.
This budget is obviously a tech-friendly budget, but the imposition of 35 per cent corporate tax would hurt a lot of small e-commerce companies. The government needs to understand that multinational e-commerce companies like Daraaz and a small local e-commerce company cannot be burdened with the same 35 per cent corporate tax. I urge the government to exempt the local e-commerce companies from this large corporate tax. Wahid Reza Sharif, president of the Bangladesh Association of Call Center and Outsourcing (BACCO), said the flat 15 per cent VAT would hurt the business process outsourcing (BPO) sector as it is a service-oriented sector. Previously, we had to pay 4.5 per cent VAT here; a 15 per cent VAT would make our business unsustainable.
Shawkat Hossain, secretary-general of the Venture Capitalists Association of Bangladesh, said the exemption of VAT on venture capital firms would be a big boost for them.
But as it is an industry in its nascent stage, I urge the government to exempt us from the high corporate tax of 35 per cent. The mutual funds industry in the country got such exemption for over 23 years.
Bangladesh Association of Software and Information Services (BASIS) president Mostafa Jabbar said the tax reduction on IT machinery would facilitate the initiation of the new hardware era in Bangladesh. We hope to see more industries like Walton in the near future, he said.
