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Wed, January 24, 2007 : Last updated 23:33 pm (Thai local time)

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Home > Headlines > Telecom excise tax revoked

Telecom excise tax revoked

Former government's dubious policy finally axed by Cabinet resolution. The Cabinet yesterday revoked excise tax on telecom services, reversing a policy of the Thaksin government.

The Cabinet resolution took immediate effect.

Information Communications and Technology Minister Sitthi-chai Pookaiyaudom, said yesterday the Cabinet had endorsed ending the 2003 resolution that imposed excise tax of 2 per cent and 10 per cent for fixed telephone and cellular services, respectively.

It also approved Sitthichai's proposal to have all telecom concessions reviewed by the Council of State, the government's legal advisory arm, to see if their development and amendments comply with relevant laws.

The levying of telecom excise is mentioned in the white paper of the Council for National Security as a policy corruption, which was cited as one of the reasons for the coup against the Thaksin government.

Sitthichai said revoking of excise was based on the reality that telecom services were no longer a luxury but a basic necessity.

The Thaksin government introduced two royal decrees in early 2003 to impose the telecom excise. Later it passed a resolution to allow private telecom operators to deduct part of their concession fees to be paid as excise directly to the government, before sharing the remaining fee with their concession owners, TOT or CAT Telecom.

Both state agencies, including new telecom entrants licensed by the National Telecommunica-tions Commission (NTC), have also been subjected to the excise tax.

As a result of the 2003 resolution, the total regulatory fees of the private telecom firms have remained unchanged. But TOT and CAT have suffered a huge loss in concession revenues estimated by both state agencies to be around Bt50 billion.

Yesterday's Cabinet move will see all telecom operators resume paying full concession fees to TOT or CAT.

Sitthichai said it depended on TOT and CAT if they would claim the Bt50-billion loss from telecom operators.

However, Finance Minister MR Pridiyathorn Devakula said both state telecom agencies could not spend part of the concession fee, to be gained after the new excise rate, on employee bonuses or pay raises.

Moreover, the ministry, which owns 100 per cent of both state agencies, will ask them to increase the revenue proportion they have returned to the ministry each year.

A telecom analyst estimated that TOT and CAT would receive an additional Bt9.4 billion and Bt13 billion in concession fees, respectively, this year under the changed system.

The analyst said that Advanced Info Service (AIS) was expected to pay a full concession fee of around Bt20 billion this year, while DTAC was tipped to pay around Bt10 billion, and True Move around Bt5 billion.

Sigve Brekke, chief executive of the second largest cellular operator Total Access Communication (DTAC), said his firm welcomed the Cabinet resolution on the new telecom excise rate, which meant telecom services had been acknowledged as a basic infrastructure for everyone.

Wichian Mektakarn, president of the largest cellular operator AIS, said the new excise did not affect it, as last year it paid Bt8.5 billion in excise and Bt12 billion in concession fees.

In a related matter, the ICT minister said after the Council of State finished examining the telecom concessions, he would find a way to share revenue fairly between private telecom operators and the state agencies.

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