Telenor absorbs commercial top-up tax

Telenor absorbs commercial top-up tax Telenor has been subsididing a 5 percent commercial tax on telecoms since its launch, according to Telenor Myanmar CEO Petter Furberg.

An update to Myanmar’s commercial tax law took telecoms off a list of services exempt from the 5pc tax on April 1, according to Mr Furberg. While Telenor complied with the government’s new strictures, other companies didn’t – putting the telco at a disadvantage, he continued.

“When we launched our services in September after multiple discussions with the government, we decided that we would collect this tax because the government was very insisting that we had to collect the tax,” Mr Furberg said. “At the same time, since our competitors were not collecting the tax, we decided to compensate the customers through a bonus.”

The “bonus” gives users the full value of their top-up, for instance subsidising K48 of a K1000 top-up taxed under the new law.

Meanwhile, Telenor pays the 5pc tax out of pocket – a stopgap until the industry catches up to code, according to Mr Furberg.

“In the future, we cannot continue to compensate the customers like this, so this depends on the whole industry following the rules of the government,” he said. “It is important for Telenor as a good citizen of Myanmar to actually follow the rules of this country, and the rules are: telecom is no longer exempt from commercial tax.”

“That is why we decided that okay, we had to collect it, but not to penalise Telenor customers over other customers, we’re giving the tax back as a bonus for now.”

In response to questions about the commercial tax, Ooredoo Myanmar’s senior manager of public relations Thiri Kyar Nyo said Ooredoo Myanmar was “still discussing amongst us, Myanmar Posts and Telecommunications [MPT], Telenor Myanmar and Ooredoo Myanmar” and “all three operators will be aligned in this case”.

MPT did not provide information on its policy with regards to the commercial tax on telecoms.


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