Sri Lanka: Same Broadband; Different Taxes?

Posted on August 16, 2008 / 8 Comments

We all missed the obvious flaw, but not Malinda. The full credit for detecting that you are taxed differently for the same service should go to the eighteen year old from Kurunegala – the ever vigilant consumer. He pointed out in the latest post in his local language blog for a 512/128 kpbs Wi-Max connection you may have to pay about Rs. 675 as tax (30%) but for a 512/128 kpbs ADSL connection you pay only Rs. 337.50 – half of that. (The figures might not be exact but the argument still valid)

Why a Wi-Max broadband consumer should pay 100% more tax than any of her ADSL counterpart for the same service is an interesting question. Wi-Max technology does not pollute environment more or Sri Lankan government (or regulator) is not necessarily biased towards wired solutions over wireless. It is just that the two tax components 10% mobile tax and now 2% environmental levy are unique to ‘mobile’ services.

Wi-Max is very much a ‘fixed’ technology (compare with 3G) but one still get it from Dialog – better known to public as a ‘mobile’ telecom services provider. (Strictly speaking it should be Dialog Broadband Networks) So you are taxed additionally for ‘mobile’ services, while no such mishap when receiving ADSL services from SLT – most still know as the good old ‘fixed’ phone services provider!

Take this hypothetical case: If Dialog decides to sell their publication ‘Zero77’ (now given free) do we have to pay 30% tax for that too?

Should we just ignore this as another farce of the ridiculous tax structure?

8 Comments

Rohan Samarajiva
August 16, 2008, 11:14 am
Malinda is to be congratulated.

In addition, it appears that the TRC has increased spectrum charges by around 300 percent, which means that wireless users are being penalized even more than Malinda shows.
Mayooresan
August 16, 2008, 11:52 am
Thanks for point out Malinda..
I don’t know why these ppl are messing everything as they wish. God saves us!
kasun
August 18, 2008, 12:52 am
off topic quetion because i see Mr.Rohan here,do we have like the highest tax rate on this earth for mobile telephony services? its 30.33% at the moment.
another interesting thing is you’re charged more than that,more often than not(when it comes to fractions on cents),who gets that extra amount? service provider,government……???????
eg:when you send a text which is priced a 50 cents you get charged 66 cents!!! if i’m not too lousy with maths thats 32% on tax…now what the h*ll is up with that
Chanuka Wattegama
August 19, 2008, 8:12 am
Kasun, Sorry Rohan is out of the country at the moment. Till he finds time for a better response let me your questions.

1. GSM Association has released a report on mobile taxes in 2005. http://www.gsmworld.com/news/press_2005/press05_22.shtml According to that Turkey with 44% was the country that imposes the highest tax percentage. (But this is not just on usage) This information might be outdated now, because many South Asian countries recently have started taxing mobile usage charges. 30% might not be the highest, but still high.

2. Re: SMS tax. Have you got it correctly? I think you pay 16 cents for Rs. 1 SMS, not 50 cents SMS. (which is 15% VAT and 1.5% Social Responsibility Levy or something – both are hidden from end users) Who is your operator?
Rohan Samarajiva
August 19, 2008, 10:08 am
Good response from Chanuka.

Tax comes in various forms. The LKR 31 per LKR 100 of mobile use is pass through. Taxes on the consumer, collected by the operator for the govt.

For example, the TRC increased by close to 300% spectrum fees this year. This is, in the end, a tax on the consumer, though it does not look like one.

In LK, the telcos for the most part have tax concessions because of BOI status. In Bangladesh they pay 45% corporate tax. This is why it’s difficult to compare tax levels, without a comprehensive study like that done by GSMA. We are still not the highest. There will likely be more: http://www.lbo.lk/fullstory.php?nid=544920901
Mahinda Herath
August 19, 2008, 10:40 am
The contention that “Wi-Max is very much a ‘fixed’ technology” is not accurate. WiMAX 16d is fixed and WiMAx 16e is mobile.
Chanuka Wattegama
August 19, 2008, 10:53 am
Well, now my friend Abu too might jump in saying WiMax is not a technology, but a standard!

The question is does all the matter to a consumer?
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