Operators welcome broadband tax reduction

7 Jan 2013

Sri Lankan newspaper The Nation reports that telecoms operators are expecting a boost to broadband internet subscriber take-up and usage following the reduction of the Telecommunications Levy on internet services on 1 January 2013. On that date the tax was lowered from 20% of revenues to 10% of revenues, for broadband and other internet services, fixed or mobile, under the state’s 2013 budget. The country’s largest mobile operator by subscribers Dialog Axiata was quoted as saying that the full reduction in tax would be directly reflected in consumers’ monthly bill or usage charges for internet services, and a spokesperson for the cellco added that ‘one of the immediate effects will see the volume of business going up which will prompt the operators to capitalise or re-invest in the system.’ Thirukumar Nadarasa, CEO of rival cellco Hutchison Telecommunications Lanka, said: ‘I think this is an excellent initiative by [the government] to promote and increase data connectivity. What we are going to be doing is to directly pass this benefit on to the consumer in terms of added value… For existing packages we hope to increase their megabit availability and for those who are not on with us, we are going to offer new packages for various groups in Sri Lanka in an effort to promote this across all segments.’ The Telecommunications Regulatory Commission (TRC) of Sri Lanka estimates that 1.2 million of the country’s 20.5 million population currently use the internet, and the government aims to increase this figure to three million by 2015.

TeleGeography’s GlobalComms Database says that the government amalgamated a raft of taxes payable by telecoms operators on 1 January 2011 when it set the Telecommunications Levy at 20% of revenues, replacing a 27% collective taxation broken down as: 12% VAT, 10% mobile/fixed subscribers levy (MSL), 3% nation building tax (NBT) and 2% environment conservation levy (ECL). The latest drop in Telecommunications Levy to 10% for internet services only was first revealed in a budget announcement of November 2012.