tax


A report from the Innovation and Information Technology Foundation has been used as the basis for a good report in the Daily Star on the situation in the worst offender, Bangladesh. Of course, it did not hurt that they sought our comments. Our comments were based on the findings of the Systematic Review we completed on the benefits of mobile phones. For instance, in Bangladesh, the telecom infrastructure providers pay 55 percent taxes to import capital equipment and 24 percent for optical fibre cable. Mobile handsets are slapped with 21 percent duty when they enter the country.
Apparently, the eight percent tax on the gross adjusted revenues of ISPs will not be implemented. Good. TRAI had suggested a uniform licence fee of 8 per cent of the AGR (adjusted gross revenue) for all ISP and ISP-Internet Telephony licences. Government levies licence fee on AGR of telecom firms after deducting some components that are not earned from telecom services. TRAI had earlier also recommended that government levy 8 per cent licence fee from April 1, 2013, but the proposal was deferred then, after questions raised on revenue items that should be considered for calculating the final charges.

More on taxes

Posted by on December 19, 2013  /  0 Comments

Connected to the earlier post on taxes, is this one about Vodafone India getting served a USD 600 million retroactive tax bill. While Vodafone maintains no tax is due on the 2007 acquisition, it has told the government it is willing to explore the possibility of a “mutually acceptable solution”. Vodafone further points it has become one of India’s largest investors, spending more than £12.8 billion in building its business in the country since 2007. The operator is also one of India’s largest taxpayers.
We all know the importance of investment in dynamic ICT markets. No investment: no new services, poor quality of service . . . As LTE is being rolled out and the conversation on 5G is gathering momentum,one would think the relationship between investment and taxes would be different from what is being reported as being paid by Vodafone: During the 2013 financial year, in which the group reported pre-tax profits of £3.
That was a tough header to compose. How was it that an Indian company that had the largest share of the Indian market was importing mobile devices from China? Anyway, that has been the case so far. It’s about to change. Not necessarily true that making things in India will be cheaper.
We just beat back a misguided attempt to break the Internet on the basis of some retrograde conception that equated the Internet with circuit switched telephony. But there is no debate that the Internet is under strain. We’ve been working with UN ESCAP, among others to address some of the problems. But the more fundamental questions of moving massive amounts of data from multiple devices are being addressed in the universities that begat the Internet. These are the solutions, not ETNO’s proposals, now seeping into European policy, to tax OTT players.
This is a battle that was brewing. Mode 1 trade in services is when the supplier is in Country A, the buyer is in Country B and the transaction occurs over some means of communication, usually electronic. Given the costs of telecom these days, it really does not make sense to open warehouses/server farms in every country. So you have centralized means of delivering services that cross borders electronically (Google, for example) and one-way by post (e.g.
BDnews24.com reports that The minimum tax of Tk 3,000 was endorsed by the MPs, barring those from the boycotting opposition, while the Minister withdrew his proposal to impose tax at source on mobile phone bill.
Less than a month ago, we expressed an opinion on the Bangladesh Finance Minister’s proposal to pile on more taxes on mobile use. Obviously, we could not have been the only people who objected, but looks like it has worked. Prime Minister Sheikh Hasina has given to pressure from exporters as she asked Finance Minister AMA Muhith on Wednesday to cut the proposed export tax to 0.8 percent at source. Speaking on the proposed budget for the next fiscal beginning on July 1, she also wanted the planned 2 percent tax at source on mobile phone bills altogether waived.
Given below in sober scientific language is the outcome of decades of deliberation: After a week-long meeting of international experts, the International Agency for Research on Cancer (IARC), which is part of the World Health Organization (WHO), today classified diesel engine exhaust as carcinogenic to humans (Group 1), based on sufficient evidence that exposure is associated with an increased risk for lung cancer. The New York Times explains that the implications are more serious for people in developing countries : The W.H.O. decision, the first to elevate diesel to the “known carcinogen” level, may eventually affect some American workers who are heavily exposed to exhaust.
The Government of Bangladesh announced its intention to impose more taxes on mobile bills last week. My op-ed in the Daily Star drew on economic principles and regional experience. There is no debate about the government requiring money. A dynamic sector such as telecom must make its fair contribution. Collection leakages in telecom are much less than in other sectors because it is a modern sector with automated billing and collection mechanisms.
Gregory Mankiw is a gutsy economist. He defended outsourcing while still serving in the Bush administration. He is a also a good economist. He could make a living on textbooks alone. He is now advising Mitt Romney as he campaigns for the presidency.
The awaited end of rapacious money making from international calls is nigh, according to Telegeography. International long distance traffic growth is slowing rapidly. According to new data from TeleGeography, international long distance traffic grew four percent in 2011, to 438 billion minutes. This growth rate was less than one-third of the industry’s long-run historical average of 13 percent annual growth. Because telcos must rely on strong volume growth to offset inevitable price declines, slowing traffic growth is making life ever more difficult for international service providers.
The language on ICTs in the 2012 Sri Lanka budget (paras 50-53) is pretty vague. Basically, LKR 500 million will be added to efforts to provide IT education and all government departments and agencies will have to work with the ICT Agency when they introduce IT into their systems. And, there are plans to set up a technology city in Hambantota that will hopefully attract IT and ITES firms there. But the really good stuff is in Para 53. The Telecommunications Regulatory Commission will implement policies and strategies to encourage telecommunication companies to give priority for the development of broad-band network facilities.
Jeffrey Sachs is a superstar. His advice contributed to the mess in post-Communist Russia, but that did not hinder him in any way from dispensing advice elsewhere (I met him when came to Sri Lanka in 2002; after I told him what we had done or were doing on telecom, he moved on to dispense advice on other topics). His opinion matters much. He has described the mobile as the single most transformative technology for development. He expands on this statement in an interview on AllAfrica.
When discussing our Telecom Regulatory Environment (TRE) indicator, we first introduce the concept of regulatory risk. I emphasize that it is not limited to the regulatory agency’s actions, but to all government actions that have a bearing on the operation of the company. The list of woes afflicting Vodafone in India is illuminating. “The combination of the capital gains tax, uncertain regulation and the very tough competitive environment has caused investors to say it wasn’t great timing” to do the deal, said Robert Grindle, an analyst with Deutsche Bank in London. Still, he said, “India is one of the fastest growing assets in Vodafone’s footprint, and without the contribution from India the company would have much lower top line growth than it does.