Al Amin :
The proposed national budget for the fiscal 2021-22 has increased tax on mobile financial service (MFS) to 40 per cent tax from 32.5 per cent, which will hit financial inclusion, the sector insiders said.
They said the higher tax on MFS will push up operational cost and will discourage poor people and agents to use this tool.
The overall tax structure of MFS is already overburdened both from the investor side and the retail level service delivery point of view, they added.
MFS is not just a payment tool but a game changer for poor people in Bangladesh. It enables unbanked people to store and transfer money using their cell phones and gives poor people access to basic financial services, this is necessary to accelerate economic growth, according to the World Bank.
The number of active MFS accounts is 3.46 crore, according to Bangladesh Bank data. Currently, there are 15 MFS service providers in the country which have banking services too. Around Tk 2,000 crore is transacted a month through MFS providers.
MFS has direct impact on the economy of the country as expatriate Bangladeshi workers are now using some official channels offered by some banks that are using MFS as the last mile delivery channel to send their hard earned remittance to their relatives timely and without hassles.
“If the corporate tax increases to 40 per cent, it will be a big obstacle to service expansion,” said Tanvir A Mishuk, Managing Director of Nagad.
Khondokar Shakhawat Ali, sociologist and researcher who has been in the MFS sector since the inception of its journey, said hiking the corporate tax will not be a good policy decision at this time because it will directly affect poor people who mainly use MFS for small transactions and pay VAT and income tax with each transaction.
The tax hike on MFS has been proposed in a time when industry operators face a hard time during the pandemic day after serving poor people without fees, which forced them to incur huge losses.
bKash, the leading MFS provider that holds around 80 per cent of the market share, has been incurring losses for the last two consecutive years.
The company registered a loss of Tk 62.5 crore and Tk 81.4 crore in 2019 and 2020 in a row despite a surge in revenue.
“In such a situation, the sector will face a tough business environment if the tax increases,” said a high official at bKash, seeking anonymity.
MFS has multidimensional effects on people’s lives. So, it has caused a quantum leap for the alleviation of world’s poor. Social scientists in developing countries have now begun to support marshaling this tool to help thwart poverty from their respective society.
