Sri Lanka’s telecoms minister has asked the finance minster to recommend dropping the VAT and other duties on smartphones in its budget proposal for the next fiscal year.
Telecommunication and Digital Infrastructure Minister Harin Fernando called on Finance Minister Ravi Karunanayake to remove the taxes to bring down the cost of smartphones to encourage people to use more digital services, local newspaper the Daily News reported.
In Sri Lanka smartphones are subject to 7 per cent duty and 1 per cent nation building tax (NBT).
Smartphone penetration in the country is about 35 per cent and mobile broadband (3G/4G) penetration is 25 per cent, according to GSMA Intelligence’s Q3 figures. Just 4.4 per cent of the country’s mobile subscribers have a 4G connection, with only two of five operators — Dialog Axiata and Mobile — offering 4G service.
Fernando has been pushing a digital agenda and believes a planned digital identification system can reduce wastage and corruption in financial transactions. As part of the country’s digitisation efforts, 960 government institutions will be provided with 100Mb/s fibre connections over the next two years.
In May the finance ministry raised the VAT on telecoms services to 15 per cent from 11 per cent to help bridge a huge budget deficit. The increase comes at a time when many sectors are calling for the VAT on mobile services to be scrapped. The rate had come down from 20 per cent back in 2006.