FCC and VoIP Taxation

October 13, 2006

Recently, the FCC ordered that all VoIP providers in the United States must pay into the |LINK|https://www.universalservice.org|Universal Service Fund|. This is a fund that was established in order to pay for telecommunication services in areas where the actual costs of doing business exceed subscriber line fees.

The FCC expressed concerned over the fact that the USF has received less funding in recent years due to the decline in telecommunication revenue. Therefore, it went searching for a new way to fund it. VoIP looked like a good target.

As part of its ruling, the FCC did not consider the other tax burden it has already placed on VoIP carriers. In fact, a quick comparison of one mobile phone bill shows that the total taxes were 13.78 percent. For that same subscriber, taxes on his Vonage phone were a whopping 21.25 percent!

It is also worth noting that, in addition to the taxes placed on VoIP service directly, subscribers are also paying for taxes for broadband! The FCC and state governments are truly playing unfairly with double taxation. Is anyone offering VoIP services in the Caribbean?