In a major blow, the Supreme Court of Nepal has dismissed all the writs filed by WorldLink which means the private internet service provider (ISP) will now have to pay about Rs 2 billion to the government in taxes. The said tax amount is to be paid in rural telecommunication development funds (RTDF) and other taxes from support & maintenance. It’s a decision that could send ripples across the ISPs of the country.
The Kathmandu-based ISP had registered its writ demanding that it shouldn’t be made to pay taxes under Support & Maintenance. But issuing their verdict on Sunday, Baisakh 30, 2081, the joint bench of SC Judges Hari Prasad Phuyal and Dr. Nahakul Subedi dismissed all 8 writs of WorldLink. The private ISP had been demanding that it doesn’t have to pay taxes under Support & Maintenance. The very topic has been a raging topic and a matter of an elongated conflict in Nepal. However, the SC verdict on WorldLink could swing the momentum in the government’s favor.
Also read: ISPs don’t charge RTDF and royalty on customers- ISPAN
Supreme Court gives verdict on WorldLink tax on support and maintenance
ISPs have long been protesting against tax duties after the government insisted that they must pay for support and maintenance. The broadband providers argue that the said service doesn’t come under telecom services and is not subject to RTDF and other taxes. Under the same, companies have been charging up to 50% for Support & Maintenance of the total bill from the customers.
Regarding the same, WorldLink filed a writ in the Supreme Court against the Ministry of Communication and Information Technology (MoCIT), Nepal Telecommunication Authority (NTA), etc. demanding that RTDF and royalty should not be charged for the maintenance fee. Now, WorldLink will have to comply with the ruling and pay taxes that amount to Rs 2 billion under Support and Maintenance services.
The verdict could be a message to all ISPs in Nepal
The Supreme Court stated that WorldLink must pay its entire tax of Rs 2 billion to NTA. The verdict went against WorldLink’s writs. But it also underscores a message to other internet service providers that they all must pay their RTDF and other taxes from support & maintenance. So far, internet providers have largely stood against the government over this particular tax. NTA spokesman Santosh Paudel says that it has Rs 3.64 billion to collect from nine prominent ISPs in RTDF fees. The verdict strengthens NTA’s position in seeking taxes from ISPs.
As per the Economics Act, ISPs are provisioned to pay 13% telecommunication service charge, 4% royalty, and 2% RTDF. ISPs have long argued that these taxes don’t apply under support & maintenance because they are non-communication services. This is the main topic of conflict between the government and ISPs/ISPAN.
This may interest you too: Is your ISP throttling your WiFi internet speed? Here’s how to know
Its implication on possible internet shutdown saga
The government has held a recommendation for foreign currency exchange for ISPs due to the latter’s refusal to pay taxes under Support & Maintenance. Therefore, for one year, Nepal’s ISPs have not been able to pay for their upstream providers. This was the “supposed” reason that Indian bandwidth provider Tata halted bandwidth for its Nepali ISPS leading to a nationwide internet struggle on Baisakh 21, 2081.
So, the Supreme Court’s decision on WorldLink’s writs could pass on a multi-prong message to the ISPs. On the other hand, WorldLink is contemplating an appeal against the SC’s decision after studying its summary.
