Communication sector provisions contradictory

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Kathmandu, May 30

Though the government had earlier adopted the policy to reduce cost of telecommunications and internet services in the country and increase people’s access to such services, a few provisions introduced in the federal budget for fiscal year 2018-19 seems to be contradictory.

The first federal budget unveiled by Finance Minister Yubaraj Khatiwada, on Tuesday, announced increasing income tax for internet service providers (ISPs) and telecom service providers by five percentage points to 30 per cent.

Similarly, the government has also increased the service charges levied on telecom operators by two percentage points to 13 per cent. Such service charges are not levied on ISPs.

Sudhir Parajuli, chief executive officer of Subisu CableNet, said that by hiking the charges, the government has contradicted its own plan to increase people’s access to information and communication technology (ICT) and increase internet penetration through the budget.

“On the one hand, the government says that it will promote the use of technology in different sectors, while on the other, it increases the taxes on ICT sector, which is contradictory to each other. This will surely affect the price of internet services and people’s access,” said Parajuli.

According to him, the government should instead bring down the existing tax slabs being imposed on ICT sector to increase the penetration of internet and technology in Nepal.

Though telecom operators like Nepal Telecom (NT) and Ncell are unwilling to comment on this issue, an official of a reputed telecom operator said that increasing income tax and service charges in the telecom sector will make telecommunication services dearer in Nepal. The telecommunication service cost in Nepal is already one of the highest in the South Asian region.

Meanwhile, officials of Nepal Telecommunications Authority (NTA) – the telecom sector regulator of the country – said that though increase in income tax and service charge in the telecommunications sector is not good, internet and telecommunication service costs are unlikely to go up. “Income tax and service charge are just two out of the many parameters that determine the cost of telecommunication and internet services.”

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Written by Sandeep
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