As the dispute over the payment of tax dues escalates between the government and the private internet service providers (ISPs), officials from India’s Tata and Airtel companies—the bandwidth providers— arrived in Nepal to discuss the issue.

The government is adamant that until the ISPs settle the dues, it won’t allow ISPs to access the foreign exchange service which has prevented the payment for the bandwidth sourced from the Indian telcos for the last nine months.

“The Indian officials from Tata and Airtel met Krishna Bahadur Raut, the communications secretary, this week and discussed the issue,” said a top official at the ministry.

Attempts by the Post to communicate with Raut were unsuccessful.

The Indian bandwidth providers have threatened to cut the services from December 31 if the Nepali ISPs fail to clear the dues, which insiders say may put the system into total disarray.

On Friday, the ISPs were hopeful that the ministry would show leniency and provide recommendations for the foreign exchange service.

“But, we don’t know what happened after the Indian officials met the secretary,” said an official of one of the ISPs.

There are 20 ISPs in the country, including the state-owned Nepal Telecom.

The ISPs said that the ministry is unnecessarily blowing the issue out of proportion.

In a letter dated July 15, 2018, obtained by the Post, the licensing department of Nepal Telecommunication Authority wrote to the Inland Revenue Department requesting not to charge the ISPs the telecommunication charges on non-telecommunication services.

The services include web service, co-location, hosted service, disaster recovery, managed service, data centre, and cloud service, according to the letter.

The letter has precisely separated telecommunication services as mobile and data service, fixed-line telephone service, international telephone service, internet service, global mobile personal communication system (GMPCS) satellite phone, very small aperture terminal (VSAT) (internet or telephone), video conferencing service and prepaid calling card service.

Subsequently, in August 2018, the Communication Ministry requested the Finance Ministry that in the total bill amount, 50 percent of charges can be levied under the support and maintenance heading, exempting the telecommunication service charges.

The decision was made following the parliamentary Public Accounts Committee directives.

The committee had said that the internet service providers do not have to pay royalties and Rural Telecommunications Development Fund charges for three fiscal years—2017-18, 2018-19 and 2019-20.

“If the ministry’s statement that ISPs have arrears to settle is true, why don’t it write to us directly,” an official of another ISP told the Post. “We have a valid reason with valid legal documents that we don’t owe any dues to the government.”

The ISPs made the latest request to provide a recommendation for a foreign exchange facility at Nepal Rastra Bank to pay the international bandwidth companies four months ago.

“It's sheer negligence of the government to make the issue problematic,” said the officials.

Even after Friday’s development when the communication secretary met the officials of the Indian companies, there was no way out to settle the issue.

“The ministry will not recommend Nepal Rastra Bank for foreign exchange until the dues are cleared,” said Netra Prasad Subedi, spokesperson of the Ministry of Communication and Information Technology.

On the bylaws of the telecom regulator, it is clearly stated that the arrears need to be cleared, said Subedi.

Officials said that the regulator is playing foul.

On the one hand, the regulator is advising the ministry not to provide them the recommendation letter for foreign exchange until they clear the due taxes. On the other hand, the same regulator is saying that the ISPs should be provided foreign exchange to settle their outstanding dues with the Indian companies, said the ministry sources.

“It’s a bit perplexing,” said Subedi.

The issue fueled by the previous Public Accounts Committee may land at the incumbent parliamentary panel.

Officials said that the past Public Account Committee was influenced.

“If the regulating body cannot make the ISPs accountable, its role comes into question,” Subedi said.

The total dues owed to the Indian companies by ISPs amounts to Rs3 billion.

Last week, internet service providers met with Minister of Communications and Information Technology Rekha Sharma and briefed her on the situation.

The internet service providers said they have readied the money to be paid to international bandwidth providers. “The money is not the issue,” said the official of one of the ISPs.