Bhaktapur Municipality sets a new tax structure on ISPs, Rs 20,000 minimum

Last Updated on August 20, 2023

Bhaktapur Municipality has placed internet service providers (ISPs) in different categories and has imposed varying tax structures. The local body has also called on the ISPs within its jurisdiction to pay their tax as per the new structure.

The municipality has reasoned that the ISPs are providing services within its political boundary and so it can impose local taxes on them. On Shrawan 21, the government sent a letter to the Internet Service Providers Association of Nepal (ISPAN) notifying them of the new categories. In the latter, it maintained that service providers will now need to pay their taxes under the new category. ISPAN is the umbrella union for the ISPs in Nepal.

Deputy Director of Bhaktapur Municipality Prabhash Kumar Chalise sent the letter urging ISPAN to facilitate the tax payment.

I request the ISPs operating within the Bhaktapur municipality to facilitate the payment of taxes to the municipality as per the new division instead of the previous system based on subscribers.” The letter mentioned that ISPs are to pay their taxes to the municipality as per the new structures formed in FY 2079/080.” Prior to this, service providers paid their local taxes on the basis of their user base.

Also read: Best Internet Service Providers in Nepal

ISPs dispute paying local tax in Bhaktapur

However, ISPs have been arguing against paying local taxes. Previously, Bhaktapur municipality had asked service providers to pay taxes on per customers basis. They refuted the tax liability reasoning that ISPs are regulated by the federal government.

ISPs have maintained that if local taxes are imposed upon them, the cost burden will translate to the end users. That means the internet price will eventually increase as a consequence. Anyway, Bhaktapur municipality has now categorized ISPs into three divisions on the basis of the number of their customers. Check out: Circular issued to local levels not to cut cables indiscriminately.

ISPs with over 1,000 customers are placed in Category “Ka” and they will need to pay Rs 50,000. Likewise, the municipality has placed ISPs with 501 to 1,000 users in the category “Kha”. As per the local government, they will need to be paying Rs 30,000 in local tax. ISPs with up to 500 unique customers are in the category “Ga”. They will need to pay Rs 20,000 in local tax for their service in Bhaktapur.

Do you think local bodies can or should impose taxes on ISPs? And how weary are you about its implication in the internet cost for the customers? Do share in the comment section below.