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Nepal might soon regulate ads played on social media and OTTs. The latest report of the Auditor General office (OAG) has found that the government has lost a huge amount in taxes due to its lack of official monitoring. As a result, the Nepal government could be gearing up to regulate ads on social media and OTT platforms.
It doesn’t mean the government is indifferent to the growing use of electronic platforms and their harms on the government’s revenues. Recently, NTA termed OTT calls to mobile phones and landlines illegal. However, it is not just basic calls and chats, the use of social media and OTT is also increasing for business activities but the government has remained elusive about it.
This has cost the government a huge chunk of possible revenues as per the Income Tax Act 58. To address this, the office of the Auditor-General has Recommended that the government should bring social media and OTTs under regulation.
Social Media has a very high penetration in Nepal. In January 2021, 13 million people are on different social media. Over The Top (OTTs) have also grown in popularity over the months. Therefore, various businesses have tagged their ads to promote their goods and services. However, they have evaded government regulations which have cost the government its revenues from ads played on electronic media.
Viber, Messenger, WhatsApp, Skype, WeChat, Emo, etc. are popular social media in Nepal. They have become an apt medium to promote businesses through ads. However, the Auditor General’ has shown its displeasure that the government has no records about ads and business activities on those platforms.
Since COVID-19 lockdown, video conferencing apps have become the proponents of work from home culture. Zoom, MS Team, Google Meet have come into prominence as businesses, schools, organizations have regularly used these platforms to hold their meetings. However, Nepalese payment for these apps has skipped government authorities.
Auditor General’s office recommends that Nepal Government should have foreign social media register themselves to make revenues collection feasible. Currently, the AG’s office has stressed regulating Viber, Messenger, Skype, WeChat, Facebook, and other such media to widen the tax scope for the government. Till now, social media and OTTs freely operate in Nepal and takes profit without being liable to any government charges.
Nepalese have also used foreign card services as well as national to pay for social media and OTT ads. Unfortunately, the government agencies have remained uninformed. But with the recommendation from Auditor General’s office, we may see the change in the coming days.
Regulation on social media and OTTs will be beneficial on several fronts. while the government can collect taxes, it can help the authorities keep a check on anti-social behaviors and track down the source of inappropriate acts with more resources.
In India, social media, or any OTT platforms cannot operate without prior registration. This helps India collect taxes and also monitor users’ behaviors more closely. Giant tech platforms such as Google and Facebook are also registered in India. This has helped the Indian government accumulate billions in taxes every year but also enforce their own policies consistent with their government. Nepal Government might have a good reference to learn from the closest neighbors in this act.
Social media regulation is not novel news in Nepal. Time and again we hear about the government bringing them within its legal channels but it has not materialized. We hope this time the government acts more rigorously and displays more commitment. It is also the responsibility of government to follow the recommendations of the OAG annual report.