The government should keep supporting the information and communication technology industry to help it tap its true potential at home and abroad instead of withdrawing tax exemptions as recommended by the International Monetary Fund (IMF), a top leader said.

The demand from Russell T Ahmed, president of the Bangladesh Association of Software and Information Services (BASIS), comes as the tax breaks for software and IT-enabled service (ITES) companies of the country are set to expire in June.

The government plans to abolish the tax benefits for various sectors to accelerate revenue collections in line with targets set by the IMF as part of its $4.7 billion loan.

The government, using calculations of the National Board of Revenue (NBR), thinks it is foregoing Tk 1,477 crore in revenue annually because of the tax exemptions granted to the ICT sector, Ahmed said.

The NBR has also estimated an annual profit of Tk 5,000 crore for the sector. However, the collective actual revenue of IT companies is significantly lower than this, let alone profits, he said.

"Our firm belief is that there is a miscalculation regarding the profits of companies. If the IMF recommended the withdrawal of tax benefits based on the NBR's calculation and subsequently these benefits are scrapped, the impact of such a decision will be devastating for IT companies. Many firms even go out of business."

He urged the NBR and the IMF to give the BASIS the scope to present accurate data so that the government can correctly calculate the revenues and profits generated by the industry.

"The government needs to provide more incentives to the sector," he told The Daily Star in an interview.

The ICT sector lies at the heart of the government's vision for Smart Bangladesh.

"As we aim to make every sector smart, including education, health and insurance, withdrawing tax exemptions will pose a major impediment since costs will rise," Ahmed said.

The spike in expenses will also deepen the country's reliance on imported software, draining foreign currencies. Similarly, the software exporting sector might suffer as Bangladesh will lose competitiveness.

He thinks on the back of tax benefits, Bangladesh could replace foreign software.

"We need to think long term, whether it's tax exemptions or other benefits for the technology sector."

Ahmed said the dependence on imported IT solutions is hindering the development of the domestic sector.

"We continue to rely on Gmail in government offices. Much of our cybersecurity infrastructure has been imported. We still buy banking software from abroad, relinquishing control of our financial system and other important sectors to others."

He suggested that the ERP (enterprise resource planning) systems or e-governance projects developed by local companies be exported to other countries such as Nepal and Bhutan with the patronage of the government.

The BASIS chief praised the prime minister's strong support for the ICT industry but highlighted the lack of understanding about its immense possibility at the lower level of the bureaucracy.

He alleged that government officials don't consult with ICT experts while framing policies and laws that govern the sector.

"Government officials draft laws and policies before coming to the sector people for feedback. However, we need policies that prevent the banking sector from using imported software. Once such policies are in place, our people will be ready to replace imported software with locally made alternatives."

He said some local companies should receive continuous government funding for research and development before the commercialisation of their products.

"Our IT sector is still a boutique industry and its focus has been scattered, with everyone attempting everything. In contrast, other countries have set a goal for a specific segment."

He cited the example of the Philippines, which has focused on call centres and is currently earning billions of dollars from the segment.