Kathmandu- After WorldLink strengthened its position by clearing over two billion rupees in government dues and bringing in foreign partners, other Internet Service Providers (ISPs) are now facing difficulties in raising enough funds to pay their taxes.
Eight ISPs, which had previously rejected paying taxes on amounts collected under the pretext of maintenance (arguing that this didn’t fall under telecommunication services), found themselves in a tough spot after WorldLink paid off its dues and obtained new licenses for Internet and network services.
Despite WorldLink’s settlement, these ISPs are struggling to gather the necessary funds to pay the outstanding taxes they owe to the Nepal Telecommunications Authority. The authority had set a deadline for ISPs to clear their dues by mid-December.
One ISP operator expressed that, with the rising competition between ISPs and WorldLink aggressively expanding, it has become extremely difficult for smaller players to secure the funds to pay taxes. “We were certain WorldLink would win the case, but now, we are left with nothing. Had we paid taxes from the beginning, we wouldn’t have accumulated this much debt,” the operator said. “Our weakness means WorldLink gains more market share.”
There is intense competition among ISPs, and without expanding the market, business has shrunk. On top of that, the dominance of WorldLink is making things worse. “We are unable to pay our dues,” the operator added.
The ISP with the largest outstanding balance, Vianet, has had its efforts to secure funds rejected by banks. A source revealed, “After WorldLink parted ways, Vianet attempted to pay the dues to the authority, but when the bank refused to provide a loan guarantee, they couldn’t pay.” It’s a major struggle for other ISPs too to come up with the required amounts in a single payment.
According to the Nepal Telecommunications Authority, Vianet owes the most, with an outstanding balance of 417 million rupees. Other companies with outstanding dues include Subisu CableNet (335 million rupees), TechMinds Network (309 million rupees), and Classic Tech (315 million rupees).
Websurfer Nepal owes 125 million rupees, Mercantile has 108 million rupees, Pokhara Internet owes 45.9 million rupees, and NetMax has 21.1 million rupees in dues. The authority also mentioned that fines are making these amounts grow even larger.
Because ISPs have avoided paying their dues despite the deadline, the authority is preparing to issue additional warnings.
“A company that rejected the idea that tax applies to maintenance charges has already paid its dues,” an authority official said. “There’s no excuse now for other companies. If they delay, their dues will only increase. We’ll send another letter.”
The authority isn’t yet in a position to revoke licenses for ISPs that haven’t paid their dues, as they still have millions of customers. “We can’t just cancel the licenses of companies with millions of customers. If we do that, the situation will be like what happened with Smart Telecom,” the official said.
Even if the licenses are revoked, the government would have to operate the services of these ISPs to prevent disruption, which isn’t feasible.
WorldLink had filed a case in the Supreme Court in 2019, challenging the tax on maintenance fees, but the court rejected the case last year. After the ruling, WorldLink settled the dues, including fines, amounting to 2.15 billion rupees.
Other ISPs, which had been supporting WorldLink, were now concerned as they couldn’t gather enough funds. With WorldLink’s strong financial position, they were able to obtain a new license and bring in foreign partners.
Last month, WorldLink announced that it had secured 1.42 billion rupees in investment from Finland’s state-owned Finfund. Two years ago, it also brought in 1.98 billion rupees from British International Investment and Dolma Impact Fund. Five years ago, it had raised 1.35 billion rupees from British International Investment.
