Government initiates recovery of ISP arrears

KATHMANDU: The government has initiated efforts to recover arrears from internet service providers (ISPs) for telecom service fees, licence fees and contributions to the Rural Telecommunications Development Fund (RTDF).

The Ministry of Information and Communication has opened talks and begun procedural work with concerned parties to resolve a long‑running dispute over outstanding payments, tax assessments and licence renewals. Minister for Information and Communication Dr Bikram Timilsina told officials of the Internet Service Providers' Association Nepal (ISPAN) that legally due taxes and fees must be paid into the state treasury.

"If there has been a tax or fee imposed on an internet service provider in an unjust way and against existing law, the government can review it. But the amount that the law says must be paid cannot be just left hanging. If there is a legitimate issue, the government will address it; otherwise, the process of collecting the dues will move forward," he said.

The Nepal Telecommunications Authority (NTA) has said it will not renew licences for companies that have not cleared their dues. Dr Timilsina warned firms should not expect to continue operating or to have permits renewed without settling amounts required by law.

He said the proliferation of small internet and telecom operators has made regulation and monitoring difficult and suggested some companies could be subject to merger or acquisition. "It is beneficial for both consumers and regulators to have a limited number of capable and financially strong service providers rather than a large number of weak companies operating," he said.

ISPAN said many service providers are under severe financial strain and cannot clear five years of arrears in a single payment, and it has asked for instalment arrangements. The association requested facilities for phased payment, particularly for solicitation fees and RTDF contributions, and called for a review of telecom service charge determinations and reassessment opportunities for large taxpayers.

Service providers have complained they were taxed on amounts not actually collected from customers. Most ISPs remain liable to pay a 4% royalty on total revenue to the Ministry of Information and Communication, taxes to the Inland Revenue Office, and a 2% contribution on total revenue to the RTDF via the NTA.

Despite repeated NTA circulars requiring submission of these amounts, together with additional fees based on audited financial statements, many providers have not complied. The Office of the Auditor General has repeatedly highlighted in its annual report that fees and other charges due from service providers remain outstanding and must be recovered.

ISPAN said the halt in licence renewals has hindered service expansion and affected banking operations and other business activities.