New taxes Lankan telcos negative for the industry, Fitch says

  Sri Lankan telcos will pay one of the highest taxes among Asia-Pacific telcos as a percentage of revenue if the new budget proposals are enforced, a rating agency said on Tuesday. Fitch Rating Sri Lanka said SLT and Dialog will pay about 28% and 36% (2014: 12% and 17%) of their respective 2015 revenue in taxes, fees and levies. This is much higher than the case for India's Bharti Airtel and Indonesia's PT Telekomunikasi Indonesia (BBB-/Stable), which paid about 20% and 17% of their 2014 revenue in similar taxes and levies to their respective governments, the agency said in a statement. Sri Lankan telecom companies are in discussions with the authorities over the issue, industry sources said. Fitch said the interim budget has proposed a one-off "super gains" tax of 25% on profit, and a tax of Rs. 250 million (US$1.8 million) on each mobile operator. “The proposals also shift the burden of a recurring telecom levy of 25% and 10% on prepaid voice and data revenue, respectively, onto telcos from consumers; operators can no longer pass these taxes on to consumers, as changes in retail prices require approval from the telecoms regulator,” the agency said. - ENDS -