Regulators look to limit the burden on operators – but some will expect investment in return
French operators negotiate cap on fixed network tax
On 18 September 2023, France’s four operators secured an upper limit on the tax imposed on fixed telecoms networks. The ‘Imposition Forfaitaire pour les Entreprises de Réseaux’ (IFER) is a flat-rate tax, first introduced in 2010 to help finance local authorities and intermunicipal organisations known as EPCI. It was initially applicable to copper but subsequently extended to other types of infrastructure to reflect the focus of operators’ investments. The IFER raised around €650m from operators in 2022. Orange, SFR, Bouygues and Free have long argued the IFER is counterproductive and “anti-digital” as the levy increases as a provider’s network grows. The operators have successfully negotiated a €400m cap on the IFER for fixed networks for 2024. However, the IFER on mobile antennas, which is at the heart of a fierce battle between local authorities and central government, is not part of the agreement and could increase as 5G rollouts progress.
Hungarian Government to scrap sector-specific tax
In Hungary, the Government has confirmed its intention to abolish the ‘supplementary telecommunications tax’ from 1 January 2025. This was announced in June 2022 alongside levies on other industries deemed to have made excess profits in recent years and was estimated that it would cost operators HUF40bn (£89m). The Government has also said it will abolish the public utility tax payment obligation for telecoms providers from 1 January 2024. The moves, which are designed to support efforts to increase the country’s productivity and competitiveness, were announced at the signing of an MoU between the Hungarian Government and Magyar Telekom. The operator has stated it is supporting Hungary’s digital transformation through investments, network developments and educational programmes – and has committed to delivering 99% 5G population coverage outdoors by 2026.
Uncertainty whether politicians will support Anatel’s proposals
Anatel has proposed a broad review of taxes applied to Brazil’s telecoms sector, which appears to recognise the potential benefits lowering the burden could have for operators and end users, for example by reducing prices, improving quality or expanding access. The country’s telecoms industry currently faces one of the highest tax burdens in the world; however, Anatel considers that the level of taxation is not the sole issue at hand, with the complexity of calculating and enforcing taxes presenting an additional cost for both the sector and the regulator itself. Anatel has therefore proposed a simplification of the tax system, as well as a reduction of the overall tax burden – things operators have been lobbying intensely for in recent months. The proposal is timely given the National Congress is discussing tax reform, although it remains to be seen whether policymakers will lend their support. Reducing taxation on telecoms could involve increasing the burden applied to other sectors, which may come at too high a political price for the Government to pay and put at risk its plan to pass reforms by the end of the year.
