ISPs look forward to clearing taxes to govt following the Supreme Court’s verdict

Published On: May 24, 2024 08:08 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, May 24: The internet service providers (ISPs) of the country have taken the initiative to clear the taxes on headings of rural telecommunications development fees and royalty charges on maintenance from the public which they had earlier decided not to pay.

The government has been pressing the ISPs to clear the taxes that they raised under the royalty revenue and rural telecommunications development fees. The ISPs that collected Rs 3.64 billion under the headings since the fiscal year 2017/18 have been refusing to transfer the amounts to the government arguing that they were not liable to pay such taxes on the maintenance fees collected from the customers.

However, the ISPs were compelled to settle the amount after the Supreme Court’s recent verdict instructed them to obey the government enforced guidelines. The apex court in this regard also scrapped all eight writ petitions filed by the ISPs.

According to an official of the WorldLink Communications Ltd, the ISPs are waiting for the full-text of the Supreme Court to move forward to clear the dues. “We have been discussing with Nepal Telecommunications Authority (NTA) to fix the modality to settle the dues,” the source said.

The government and the ISPs have been at loggerheads for the past few years over the tax issue. The government insists that ISPs clear their backlog payments on non-telecommunication services, including web service, co-location, hosted service, disaster recovery, managed service, data center, and cloud service.

Earlier, the Ministry of Communications and Information Technology (MoCIT) had formed a study team led by Joint Secretary Gaurav Giri to probe into the tax evasion by the ISPs. Likewise, the Office of the Auditor General in its annual reports has also been pointing out the apathy shown by the ISPs for the past eight years.

However, ISPs argue against paying taxes for non-telecommunication components, stating that it is against the law. They have been pointing out the decision of the parliamentary Public Accounts Committee ordering the government to exempt ISPs from taxes on non-telecommunication components a few years ago.

Amid mounting controversies between the government and the service providers, the MoCIT has refused to recommend the ISPs from receiving the foreign exchange facility from Nepal Rastra Bank to clear their outstanding dues to Indian companies. Due to this reason, Nepalis experienced a massive disturbance in internet services three weeks ago, mainly after they failed to clear the dues that they owe to Indian bandwidth providers.  


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