Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Nepal’s telecommunications sector is showing clear signs of distress, with revenues declining sharply over the past seven years amid increasing tax burdens, regulatory delays, and rising competition from internet-based communication platforms. According to data from the Nepal Telecommunications Authority (NTA), the combined revenue of the country’s two major telecom operators fell from NPR 98.71 billion in FY 2017/18 to NPR 71.21 billion in FY 2023/24, marking a 28% decline.
Experts say the continued fall in revenue has significantly affected profit margins, which in turn has constrained new infrastructure investments, including the rollout of 5G networks. They warn that without swift policy reforms, Nepal’s telecom industry could face deeper financial and operational challenges.Former NTA Chairman Bhesh Raj Kandel stated that although telecom services are essential, the government has been taxing the sector as if it were a luxury industry. Telecom companies currently pay 30% corporate tax, higher than the 25% rate applied to most other industries, along with multiple additional levies.
Nepal Telecom reported revenue of NPR 38.73 billion in FY 2023/24, but its profit dropped to NPR 2.66 billion, down from NPR 6.23 billion the previous fiscal year. The company cited NPR 20 billion spent solely on GSM license renewal and high tax obligations as major reasons for profit contraction.
Similarly, Ncell disclosed that telecom operators in Nepal pay 50% to 60% of their total revenue to the government in the form of taxes and fees. In FY 2023/24, Ncell earned NPR 32.48 billion, out of which NPR 16.98 billion (52%) was paid to the government under 13 different tax and regulatory headings. The company says such high tax pressure has restricted further investment in network expansion and modernization.
Meanwhile, the sector’s contribution to Nepal’s GDP has also declined, currently standing at only 1.2%, with 3.4% of total national revenue coming from telecom.
Industry analysts point out that Nepal imposes significantly higher telecom taxes compared to regional countries. For example:
China: 6% VAT and 25% corporate tax
India: 18% GST and 25% corporate tax
Thailand: 7% VAT and 20% corporate tax
In contrast, Nepal levies:
13% VAT
10% Telecom Service Charge
4% Royalty
2% Rural Telecom Development Fund
2% ownership tax on SIM/landline
plus advance taxes and high license renewal fees.
Sector stakeholders argue that unless special sector-based taxes are reduced, the corporate tax rate is corrected, and license renewal fees are restructured, Nepal’s telecom sector may struggle to sustain operations and future investment needs.
They stress that policy reform is now urgent to avoid long-term decline in connectivity, digital inclusion, and national ICT progress.
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