ISPs complain over 42 percent tax on internet services

Kathmandu: The Internet is on the list of essential services. However, the government is levying about 42 percent tax on various types of internet services. According to an analysis by the Internet Service Providers Association (ISPAN), Internet services are becoming more expensive due to government taxes.

As per the ISPAN the government is directly and indirectly collecting the fees paid by the customers on the internet service in addition to the cost of the service provider and a certain percentage of profit.

At present, the government collects about a dozen taxes and fees from the internet at various levels. One has to pay 10 percent TDS when importing international bandwidth to Nepal. According to the ISPAN, 10 percent TDS of the purchase price has to be deposited in the account of the government tax office to bring in international bandwidth of Rs 100. Eleven network service providers are importing international bandwidth to Nepal.

Network service providers sell international bandwidth to about 125 Internet service providers operating here. But, for that, they charge 10 percent with the internet service provider.

Internet service providers pay four percent royalty to the Ministry of Communications and two percent rural telecommunication fee to the Rural Telecommunication Development Fund from the income generated throughout the year. This amount is also indirectly collected by the telecom company even if it is not directly linked to the customer’s bill.

The government also charges 13 percent for telecommunications services on the Internet.

An additional 13 percent value added tax is added to the price prepared by keeping all these taxes, service provider’s operation and other expenses and profits. With telecommunications companies, the government levies up to 30 percent income and corporate taxes, just like a liquor company. The government also collects five to 15 per cent of the optical fiber, drop cable, router and other switches that are the infrastructure of internet service.

Service providers say that the fare charged by Nepal Telecom and Nepal Electricity Authority while using infrastructure including pole and OPGW cable has also made the internet more expensive.