Sri Lanka "encourages" CDMA rollout by increasing duty on handsets

Sri Lanka “encourages” CDMA rollout by increasing duty on handsets

Posted on March 14, 2006 / 8 Comments

The LBO story states:

Sri Lanka’s two private wireless local loop telecom operators have been called up to pay around Rs. 400 million as duties for importing handsets, industry officials said.

Last month, the island’s Board of Investment (BOI) slapped a 33 percent import duty on Code Division Multiple Access (CDMA) handsets with immediate effect.

CDMA is a low cost cellular technology that has been effectively used world over to provide cheaper connectivity to rural homes. Though the technology is similar to mobile phones, the handsets are similar to a bulky fixed line unit.

Being BOI companies, Suntel and Lanka Bell, are allowed to import customer premises equipment or handsets without paying import duties.

However, since rolling out CDMA services since last June, Lanka Bell and Suntel have been asked to pay up for around 180,000 units sold todate.

Sri Lanka Telecom (SLT), which is partially owned by the government and Japan’s NTT and pays taxes regularly, however has got away, despite selling around 100,000 CDMA connections, according to the telecom watchdog.

“We are going on the premise that both operators (Lanka Bell and Suntel) sell the equipment to the ultimate user, hence they have to pay,” BOI chief Lakshman Watawala explained.

LANKA BUSINESS ONLINE – LBO

Sounds like one part of the government wants to increase the new customer’s connection costs while another is trying to decrease it (as long as the service is obtained from the incumbent–details in the LBO story)? I hope this makes sense to someone.

8 Comments

ivap
March 14, 2006, 2:44 pm
From the LBO story

However, mobile penetration has skyrocketed with 3.4 billion users

3.4 billion ? surely this can’t be correct, can it?
samarajiva
March 14, 2006, 4:28 pm
I was hoping LBO would correct this obvious typo. The mobile numbers are approximately:

Dialog 2,200,000; Celltel 578,000; Mobitel 408,000; Hutch 306,000; Total 3,400,000
The Benevolent Dictator
March 15, 2006, 5:55 am
LBO is quite famous for these typos. I remember a few months ago they reported two different Net Profit figures for the same company, and an absurdly high share capital for the same company, all in the same article! I love their article titles but they need a better proof reader methinks.
Harsha
March 15, 2006, 2:07 pm
on the one hand the BOI wants to increase the cost of connection to the user by increasing handset taxes on Lanka Bell and Suntel and on the other TRC has threatened to arrest (yeah, arrest) the CEO of SLT if he does not reduce connection charges on their CDMA phones?
Sanjana Hattotuwa
March 15, 2006, 3:20 pm
What a wonderful example of the sheer absurdity that defines so much of public policy in this country.
Mahinda Herath
March 16, 2006, 4:12 pm
Hey, look at this this!

“Sri Lanka Telecom (SLT), which is partially owned by the government and Japan’s NTT and pays taxes regularly, however has got away, despite selling around 100,000 CDMA connections, according to the telecom watchdog”

The “….. has got away, despite…” story of LBO is rubbish. Sri Lanka Telecom has always paid the duty on CDMA handsets at 33% and is continuing to do so.
samarajiva
March 21, 2006, 3:36 pm
Well, at least the dissonance in government actions is not intentional.

Just that the Board of Investment has gotten into taxation, now that it has been rebuked for not bringing in enough investment. Perhaps it should be renamed Board of Taxation and Investment?

Today’s Daily Mirror reports:

TRC urges BOI to remove import duty on CDMA sets

TRCSL yesterday made a written recommendation to the Board of Investment (BOI) to consider revoking their earlier decision to impose a 33% import duty on CDMA handsets.

According to TRCSL Director General Kanchana Ratwatte the recommendation was made aiming to keep CDMA cost low, so that it is more accessible to the rural masses.

The BOI recently imposed an 18% import duty and a 15% Value Added Tax on CDMA handsets.

Contd on page 2 The two wireless local loop operators (WLL), Suntel and LankaBell were then iformed that the duty was applicable on all units sold since CDMA services were launched last year.

Since CDMA services were launched in mid 2005, both Suntel and Lanka Bell have sold an estimated 200,000 connections.
samarajiva
April 13, 2006, 6:44 pm
Mar. 20 (LBO) – Sri Lanka’s telecommunications regulator has upheld two private fixed operators’ claim to import handsets duty free, and blocked the country’s main investment body’s move to tax the instruments, a top official said.

Last month, Board of Investment of Sri Lanka (BOI) slapped a 33 percent import duty on Code Division Multiple Access (CDMA) handsets with immediate effect.

CDMA is a low cost wireless technology that has been effectively used world over to provide cheaper connectivity to rural homes.

Though the technology is similar to mobile phones, the handsets are bulky desktop units like standard fixed line units.

For full story: http://www.lankabusinessonline.com/fullstory.php?newsID=901928752&no_view=1&SEARCH_TERM=5