Uncomfortable Reality of Telecommunications: Sector in Crisis as Regulator Praised for Paying Highest Income Tax
मंसिर ४, २०८२ १२:३६
Kathmandu: The telecommunications sector is in crisis, yet the Nepal Telecommunications Authority, the regulator of the same sector, has been honored as the highest income tax–paying organization. The Authority, which earns large sums from license fees collected from service providers, received the recognition from the Internal Revenue Department.
Tax experts and industry stakeholders are surprised that the regulator has been honored for paying more income tax than the companies. They question why a government agency that collects revenue from operators is being celebrated, instead of recognizing companies that pay taxes from their own earnings. The Authority’s high tax payment is not from regular income; it comes largely from fees paid by service providers as their 25-year license periods expire.
Telecom operators, internet service providers, and other companies pay various taxes and fees to the Authority. The main source of income is license fees, including renewals. Telecom operators have been paying around Rs 20 billion to the Authority in renewal fees.
Nepal Telecom paid Rs 20 billion in a lump sum as its renewal fee in April 2081. Ncell paid Rs 5 billion in two installments in the same year after receiving approval to pay the renewal fee in parts. These payments form the Authority’s main income.
Former Finance Secretary Bidyadhar Mallik said it is unusual to honor a regulatory body for paying high taxes because regulators are not commercial entities.
“The Telecommunications Authority is not a corporate body. Honoring it for paying high income tax is not meaningful. If regulators are to be honored, the National Bank would pay almost a trillion. The Securities Board would also pay more. The Authority may be a legal entity, but it is not a corporation,” Mallik told TechPana.
Stakeholders say it is inappropriate to praise the regulator for paying high taxes at a time when the sector is struggling. Both Nepal Telecom and Ncell are reporting declining earnings, yet the regulator is being honored based on taxes generated from these same companies.
The financial statements of Nepal Telecom, released on the same day the NEA Chairman Bhupendra Bhandari, also a chartered accountant, received the honor, paint a grim picture. Nepal Telecom’s net profit has fallen by 24 percent in the first quarter of FY 2082/83. Compared to the same period of FY 2081/82, its profit declined by Rs 414.4 million to Rs 1.32 billion.
Ncell, the privately operated telecom company with foreign investment, is also struggling and expects the Authority to protect the sector through policy changes as revenues continue to fall.
With less than four years left before Ncell’s 25-year license expires, the Authority has not provided a clear roadmap for the company’s future ownership. At a time when uncertainty is growing, being recognized as a high tax–paying agency offers no tangible benefit to the Authority.
According to NEA data, total revenue of telecom operators was Rs 81.2 billion in FY 2076/77. By FY 2080/81, it had dropped to Rs 68.11 billion. The internet market is also unstable. Due to unhealthy competition, most ISPs, except a few large ones, are struggling to survive.
Despite this, the NEA has become the highest tax-paying body due to its income from fees paid by telecom operators.
Basudev Poudel, Director at the Department of Internal Revenue, said the Authority was honored because it had obtained a business PAN and paid the highest income tax among agencies under the Telecommunications Authority category. Other indicators were also favorable.
“The Authority is our taxpayer. It has taken the business PAN. As per our award criteria, we honored it after it paid the highest income tax,” Poudel said.
According to the Authority’s balance sheet and income and expenditure statement for FY 2081/82, it recorded Rs 7 billion as advance income tax in FY 2080/81. In the balance sheet up to Asad 32, 2082, the Authority has again shown Rs 7 billion as advance income tax for FY 2081/82.
पछिल्लो अध्यावधिक: मंसिर ४, २०८२ १२:३६
