Telcos to get amortisation benefits on 3G spectrum fees

July 31, 2013

Mobile phone operators will get tax exemption for the money they will pay the government as 3G spectrum fees as the National Board of Revenue has decided to provide the operators with amortisation benefits for the fees, officials of the NBR said on Tuesday.
Under the amortisation scheme, mobile operators will be allowed to show the money as expenditure from the income in their financial statement in equal instalments in the licensing period, they said.
Four mobile phone operators Grameenphone, Banglalink, Robi and Airtel are expected to participate in the auction scheduled for September 2 for obtaining 3G licences.
In the auction, the operators will bid for a total 40 MHz of spectrum for operating 3G service for 15 years.
The Bangladesh Telecommunication Regulatory Commission will award three licences to three out of five mobile companies operating in the country and one to any foreign firm.
Another local operator, the state-run Teletalk, has already got the 3G licence by default.
The minimum base price for 40 MHz is $800 million as the BTRC has fixed minimum base price of $20 million for each MHz.
‘Every year, the operators will add a portion of their income as expenditure in financial statement and they will not need to pay tax for that portion,’ a senior NBR official told New Age.
As the licences will be provided for 15 years, the operators will get amortisation in 15 equal instalments for the 15 years from the date of licence award, he said.
He said the provision had been included in the Income Tax Ordinance-1984 for the first time through the Finance Bill 2013–2014.
As the mobile operators will spend a huge amount of money for getting 3G licences, the government has decided to provide them with the amortisation facility, NBR officials said.
Amortisation for such licence fees is internationally recognised, they said.
According to the provision, any resident mobile phone company that paid any sum as spectrum assignment fees on or after the first day of July 2012 for such licence applicable for two or more years to run a business will get the facility.
An operator will be allowed a deduction of an amount proportionate to licensing years and the deduction will continue till the last year of the period for which the licence was granted, it said.
The mobile operators, however, also demanded amortisation facility for the money that they spent for 2G licences.
The NBR officials said that they would examine their demand.
‘We have no information whether they have already taken the facility in any other form or not. On the other hand, amortisation facility has been provided for the operators, who paid spectrum fees on or after the first day of July 2012. So we have to scrutiny further the demand of the operators,’ an NBR official said.

-With New Age input

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