Tax cuts will make telecom services affordable: NT

Published On: March 21, 2017 09:45 AM NPT

KATHMANDU, March 20: Nepal Telecom (NT) has urged the government to reduce taxes that the latter has been levying to make telecommunications services more accessible and affordable.

Speaking at an interaction with the media in Kathmandu on Monday, Surya Bhakta Pokhrel, chief financial officer of NT, said that reduction in taxes could make telecommunications service cheaper thereby attracting more subscribers. “Reduction in taxes and service charge will in turn help in economic development of the country,” he added.

At present, users have to pay different taxes and service charges like Telecom Service Charge (TSC), Ownership Tax, and Value Added Tax (VAT). Telecommunication service subscribers have to pay 11 percent as TSC, 2 percent as Ownership Tax (OT) and 13 percent as VAT. For example, of the Rs 100 topped-up by a subscriber, NT gets only Rs 78.16. The remaining Rs 8.60 (TSC), Rs 1.73 (OT) and Rs 11.51 (VAT) goes to the state coffers.

Likewise, NT has been paying four percent of its total operating revenue as royalty to the government, while two percent of its operating revenue goes to Rural Telecommunication Development Fund (RTDF), according to Pokhrel.

Pokhrel further added that NT contributed 52.27 percent of its total revenue in Fiscal Year 2015/16 to the government fund. Such contribution was 48.68 percent of the total revenue in 2014/15.
According to NT officials, the ongoing Melamchi pipeline work and road expansion work have also increased operating cost of the state-owned telecom operator. “As telecommunication wires are often cut during pipeline and road expansion work, we have to set aside more budget to repair our network,” he added.

Nearly 50 percent of the country’s population is using NT services, according to NT officials. “However, NT has not been able to make huge profit like other private operators as it has been making huge investment to expand telecommunications service in rural parts of the country,” added Pokhrel.

Likewise, Pratibha Baidhya, the spokesperson for NT, said that the operator was planning to expand 4G service throughout the country at the earliest. Commenting on voice clarity problem in NT network, she said some customers have been facing the problem since the earthquakes of 2015. “The earthquakes destroyed many telecommunications infrastructures which have affected our service quality,” she said, adding: “The quality of mobile sets also affect voice clarity.”

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