DHAKA: By government accounts, four foreign-backed cellphone operators owe $500 million to Bangladesh in unpaid taxes. By the companies’ accounts, the figure is closer to $50 million — if it isn’t zero. As the legal row drags into its fourth year without resolution, telecommunications analysts warn it is putting pressure on the industry that is Bangladesh’s single largest source of revenue, providing $1.43 billion in tax revenues in 2015.
Government regulators say the companies broke the law by selling old SIM cards without properly notifying regulators, and then failed to pay taxes on those sales from July 2009 and December 2011. They also allege the companies concealed customer information to obscure the issue, according to government legal documents on the case.
The four companies — Norwegian Telenor’s subsidiary Grameen Phone; Egypt’s Orascom Telecom’s Banglalink; Robi, the Malaysian-Japanese joint venture Robi Axiata Ltd.; and India’s Bharti Airtel’s subsidiary Airtel — have rejected the government’s demands, taking the claim to the tax appellate tribunal. Both the government and its tax authority refused comment while the case is still under court review.
Industry experts say the standoff may alienate companies and spook investors in this country of 160 million people. British-based Vodafone is facing a similar case in India, where authorities want $2.5 billion in back taxes from an asset purchase done before Indian legislation in 2012 made such deals subject to taxation. Most of the 128 million mobile-phone subscribers in Bangladesh are customers of one of the four private companies involved in the tax dispute.
“The government must think of the issue from the point of view that this is the largest foreign investment sector in the country,” said T.I.M. Nurul Kabir, who heads the Association of Mobile Telecom Operators of Bangladesh lobbying consortium. “The industry is suffering for this dispute.” Telecoms companies and their investors are growing more cautious about building a rural cellphone network, said Abu Saeed Khan, a Bangladeshi telecommunication expert who works as a senior policy fellow of the Colombo-based LIRNEasia think tank.
