Thursday, April 25, 2019

Supreme Court stays LTO on Ncell tax

The Apex Court has stayed the Large Tax Payers Office (LTO) from recovering the Capital Gains Tax (CGT) until further notice.
The Supreme Court has issued the temporary stay order as the Ncell has moved the Court against the Large Tax Payers Office (LTO) that has served Ncell a seven-day notice to pay its Capital Gains Tax (CGT) of Rs 39 billion within a week that expired on Monday. The telecommunications moved – on April 22 – to the Supreme Court seeking an order to vacate the LTO decision one day ago the expiry of the deadline.
The telecommunications company is, though, blamed for delaying to clear its tax liability, it has asked the Apex Court to reduce CGT to Rs 14 billion, as according to it, the LTO calculations is 'unjustifiable'.
The move to challenge the LTO's tax assessment at the apex court, which had earlier issued a verdict making Ncell and its parent company Axiata liable for the CGT dues, has been interpreted by some quarters as a tactic of the telecom to either avoid its tax liabilities or at least lower them.
The Ncell move has prompted calls on social media to boycott its services until it pays the government what it owes. It is even surprising that student unions and youth wings of political party that is in government, and loose civic groups have made a public appeal urging people 'not to use Ncell sim cards' until it pays the assessed tax. They have also accused Ncell of exploiting legal loopholes to delay and reduce its tax bill, though they have been mum on who and why allowed the TeliaSonera to leave the country without paying tax. They have also not asked to punish the then tax officials, prime ministers and finance minister, why they have let the TeliaSonera leave Nepal without paying CGT and who have assured the Axiata that it will not need to pay CGT, despite the largest deal in the country's corporate history.
"We urge the authorities to not take any anti-national decision like giving a tax exemption to Ncell,” reads a statement of government-affiliate four student and youth wings. They have also urged the public to boycott the services of the telecommunications company instead they should have pressurised the government – the ruling party and their mother organisation – to deal the case diplomatic. The government can still write the TeliaSonera – that is a government listed company in Sweden and settle the tax row or let the Court decide the case, instead of creating a mass against the joint venture company.
"If Ncell does not pay tax within 24 hours, we would like to inform through this statement that more programs will be announced to pile pressure,” the statement signed by Young Communist League's president Ram Prasad Sapkota, All Nepal National Free Students Union (ANNFSU) president Nabina Lama, Youth Association of Nepal president Ramesh Kumar Paudel and All Nepal National Independent Students Union-Revolutionary president Ranjit Tamang, reads.
The students unions move will not only send a terror chill in the foreign investors but also institutionalise the corruption. TeliaSonera has been said to paid huge sum to the party leaders to let it leave the country without paying tax after siging the billion-deal with Axiata.
“In filing the petition at the apex court, Ncell wants to buy more time until the case is finalised and it is also a ploy to avoid taxes,” said a lawyer Surendra Bhandari, who had pleaded in court on behalf of a group that filed the case leading to the verdict of the Supreme Court that Ncell and Axiata should pay CGT. "A video statement by Bhandari on this issue has been shared by over 14,426 users on Facebook."
Until Ncell pays the full amount of taxes, let's run a campaign not to use its Sim, he appealed, adding, "Only if we run this campaign will Ncell be compelled to pay what it owes in taxes. Otherwise it will skip taxes amounting to billions, causing a huge loss to the country."

Nepal, UAE agree to seal revised labour deal

Nepal and the United Arab Emirates (UAE) today agreed to sign a revised labour agreement that is expected to benefit as many as 360,000 Nepali migrant workers, who are currently working in the UAE. The both sides also agreed on a draft of revised labour agreement that guarantees zero investment jobs in the Gulf country for Nepali workers.
The two sides reached the consensus during a two-day second Bilateral Technical Meeting on the draft Memorandum of Understanding (MoU) between Nepal and the UAE on Recruitment, Employment and Repatriation of Workers that concluded today, in Kathmandu.
The deal was signed by joint-secretary at the Ministry of Labour, Employment and Social Security (MoLESS) Ram Prasad Ghimire and director of International Bilateral Relations under the Department of Ministry of Human Resources and Emiratisation of the UAE Abdullah al-Muaimi. According to the understanding, Nepali workers will not have to bear any financial burdens – whether cost or any fees – for jobs in the emirates.
The revised agreement that has put special stress on enforcement of wage protection system for Nepali workers will be tabled at the cabinet soon to approve it. "The MoU will be signed once the two governments approve the document,” Ghimire, who led the Nepali delegation, said, adding that once the new agreement is signed, it will officially replace the ‘MoU between the Government of Nepal and the Government of United Emirates in the Field of Manpower’ signed on July 3, 2007.
According to the proposed agreement, the Nepali workers will not pay any amount in cost or fees for jobs in the UAE. "The employer will be paying all the expenses on behalf of the worker,” the agreement reads, adding that employers will bear the cost of recruitment to the recruitment agencies, employment and residency of Nepali workers in the UAE. "The employers will bear all the costs related to recruitment, employment and the residency of Nepali worker in the UAE including but not limited to recruitment agency fees, air ticket costs, insurance fees, visa fees, medical examination fees and all other recruitment related costs and fees."
"The UAE government will ensure access to Labour Court for the worker without any cost until the case is resolved," it reads, adding that when the case is in the Court, the worker is entitled to apply for a temporary work permit in accordance with the relevant Laws of the UAE. "The terms and conditions of employment of the Nepali worker in the UAE shall be defined by an Employment Contract between the worker and the employer."
The Employment Contract will specify the basic employment conditions, and the rights and obligations of the employer and worker in accordance with the laws and regulations in force in the UAE, it further reads. "The UAE government will ensure that the employment offer shall indicate the job specifications, required qualifications, types of jobs for which recruitment is proposed as well as the terms and conditions of employment offered including wages, non-wage benefits, accommodation and transportation when applicable, end-of-service entitlement, and any other details required by the government of the UAE. All these details must be reflected unaltered in the Employment Contract, Ghimire said, adding that the worker will be eligible to seek and obtain alternative employment when it is duly established that the employer has failed to meet contractual or legal obligations to the worker due to any reason including closure or winding up of business or if the worker is subjected to violation of any of his or her rights under UAE laws, without prejudice to the right of the worker to collect his or her dues from the employer and/or seek judicial redress. "In such events, the worker shall also have the right to return back to Nepal, if he or she so desires. In such case, the employer will bear all associated costs."
Most of the Nepali migrant workers currently are ordinary workers engaged in construction, hospitality, farming and security service sectors in the Gulf nation.
The UAE government has also agreed to ensure the safety, security and welfare of the Worker with due regard to the female worker. "The government of the UAE shall ensure that the worker is not subject to any form of unlawful treatment and is free to communicate with any third party," it reads, adding that the UAE will ensure extensive and close oversight over the application of the existing wage protection systems to monitor timely payment of wages and other benefits. "Besides, the UAE law has a provision of both work related insurance as well as medical insurance schemes that cover almost all the cases of accidents or injuries and sickness except personal negligence.
Nepal, as the chair of the Colombo Process – a common regional forum of labour source countries – has put priority on securing zero cost jobs for its workers as well as reviewing the existing labour agreements and signing new deals with other destination countries lately. Likewise, the UAE has been one of the most-preferred labour destinations among the Gulf countries for Nepali migrant workers for its better treatment, remuneration among other facilities. 

Wednesday, April 24, 2019

New UN-ASEAN study reveals slow but devastating impacts of drought in the region

Future scenarios of drought in many parts of South-East Asia may become even more frequent and intense, if actions are not taken now to build resilience, according to the latest joint study by the United Nations (UN) Economic and Social Commission for Asia and the Pacific (ESCAP) and the Association of Southeast Asian Nations (ASEAN).
Launched today at the 34th meeting of the ASEAN Committee on Disaster Management, the study Ready for the Dry Years: Building Resilience to Drought in South-East Asia offers clear analysis on the principal risks in the region. The study is released against the backdrop of the ongoing drought in almost all countries in South-East Asia with social and economic impacts already being felt very strongly in Cambodia, the Philippines, Thailand and Viet Nam.
As reported by the study, the cumulative impacts of drought in the region strikes hardest at the poor and heightens inequality, as well as degrades land and increases the prospects of violent conflict. Droughts can also be particularly damaging in countries where many people rely on agriculture for primary employment (61 per cent in Lao PDR, 41 per cent in Viet Nam, 31 per cent in Indonesia, 27 per cent in Cambodia and 26 per cent in the Philippines). 
Over the past 30 years, droughts have affected over 66 million people in the region. However, due to their slow-onset, droughts are often under-reported and under-monitored, resulting in conservative estimates on its impact in the region. The study points out that the future could be even worse. With climate change, many more areas are likely to experience extreme conditions with severe consequences.
“More dry years are inevitable, but more suffering is not," UN under-secretary-general and executive secretary of ESCAP Armida Alisjahbana said, adding that timely interventions now can reduce the impacts of drought, protect the poorest communities and foster more harmonious societies.
Increasing resilience to drought will require much better forecasting and more efficient forms of response, at both national and regional levels. Ready for the Dry Years proposes three priority areas of intervention for ESCAP and ASEAN – strengthening drought risk assessment and early warning services, fostering risk financing instruments that can insure communities against slow-onset droughts and lastly, enhancing people’s capacities to adapt to drought.
"The priority areas of intervention highlighted in this report will contribute to the development of policy responses to mitigate the impact of future drought and eventually will strengthen efforts on building the ASEAN Community that is resilient to drought,” said secretary-general of ASEAN Dato Lim Jock Hoi.
The study was produced as part of ESCAP and ASEAN’s close collaboration on disaster risk reduction under the ASEAN-UN Joint Strategic Plan of Action on Disaster Management.

PM hands over ADB-supported earthquake resistant model school to community

Prime Minister KP Sharma Oli today handed over the newly reconstructed Sanjiwani Secondary School in Dhulikhel to the community at a ceremony.
The Asian Development Bank (ADB) is supporting the reconstruction of 154 such schools badly damaged by the 2015 earthquake under the Earthquake Emergency Assistance Project.
“A better reconstruction process can strengthen a country’s resilience to natural disasters. Reconstruction offered us an opportunity to build back better and all the schools reconstructed after the earthquake with ADB support follow better standards, building norms, and amenities,” said ADB country director for Nepal Mukhtor Khamudkhanov. "The schools are not only safe and earthquake resistant, but also have better facilities," he said, adding that a safe and nurturing learning environment goes a long way in helping children develop their full potential.
Sanjiwani Secondary School is one of the 9 model schools reconstructed under the project. Besides 32 new classrooms, the school has a 12-room hostel for out-of-town students. To enhance science education, the school has been provided with ICT and science laboratories equipment. The model school concept is a new initiative under the government’s School Sector Development Programme, which aims to improve the quality of education in Nepal.
At the same event, two district roads in Kavre and Bhaktapur rehabilitated under the project were handed over to the provincial government in the presence of the communication minister Gokul Baskota and the chief executive officer of the National Reconstruction Authority (NRA) Sushil Gyewali.
ADB is supporting the government’s efforts to put thousands of children back into schools, return vital government services to earthquake-affected communities, and create jobs and income for families by repairing critical road networks. A total of 162 schools, including 17 schools funded by USAID and 8 schools funded by the Japan Fund for Poverty Reduction (JFPR), are nearing completion with 90 schools already substantially completed under the project. ADB is also supporting reconstruction of 174 schools under the Disaster Resilience of Schools Project. ADB is supporting schools to prepare their own school disaster risk management plans. ADB support to Nepal reconstruction totals $382 million.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members, 49 from the region.

Monday, April 22, 2019

Debt trap warnings over BRI projects motivated by bias: FM Gyawali

Foreign minister today dismissed the notion that Nepal could fall into a Chinese debt trap, if it chose to be part of the Belt and Road Initiatives (BRI).
The argument that Nepal could fall into a Chinese debt trap, if it chose to take loans under the BRI is motivated by bias," said foreign minister Pradeep Kumar Gyawali, addressing a press meet today.
There are some concerns from various quarters that BRI loans could possibly push Nepal into a serious debt trap like some of the countries in the world. "Nepal is aware what it should do and what it should not do in its national interests," he said, adding that Nepal is free to decide on its development initiatives. "Nepal will decide independently on Chinese loans and the selection of projects under BRI."
Arguing that Chinese debt was not behind the serious economic crises in many Latin American countries including in Argentina back in the 1990s and 2000s, he said that they were not under the Chinese debt trap. "Greece is still struggling with a serious economic crisis and many other countries have also fallen into debt traps,” he added.
He also explained that there is no rule that a country will fall into a debt trap through taking loans from any particular country and not fall into it when taking loans from another country. "The issue is whether Nepal selects a project on the basis of possible returns and what is the pay back plan," he added, though his government's selection of projects till date – since it came to the power with almost two-third majority – has not seen any suitable and economically viable projects.
Since Nepal is currently holding discussions with China on the projects to be incorporated into BRI, there are a couple of projects under consideration.
Gyawali also said that Nepal and China will sign the protocol of the Nepal-China Transit Transport Agreement during visit of President Bidya Devi Bhandari beginning from tomorrow. The protocol paves the way for the implementation of the agreement and allows Nepal third country transit facilities via Chinese ports. The first state level visit of a head of the state since the establishment of a federal republic is expected to connect Nepal's development endeavors with Chinese development success through the signing of protocol in the presence of the heads of the states.
Secretary at the Ministry of Industry, Commerce and Supplies Kedar Bahadur Adhikari will sign the protocol with his Chinese counterpart during the forum in the presence of President Bhandari. Though the protocol is said to allow more flexible terms for trade and transit – compared to India – and might be feasible for trading with South East Asian countries also, the cost of doing business through the new route is yet to be calculated.
The agreement allows open utilisation of either inland waterways or roads for transit and transport to sea ports for third country trade.
Nepal signed the Transit Transport Agreement with China in 2016 after trade blockade by India.
Likewise, President Bhandari is scheduled to take part in a roundtable to be hosted by her Chinese counterpart Xi Jinping and hold bilateral talks with Xi on April 29. Transport minister Raghubir Mahaseth will deliver a speech on 'Infrastructure and Connectivity' during the forum.

Ncell moves to court against LTO

A day before the expiry of the seven-day deadline to pay its capital gains tax (CGT), Ncell today has filed a writ petition at the Supreme Court arguing that the tax amount determined by the Large Taxpayers’ Office (LTO) earlier last week was not in accordance with the existing law.
The private telecom giant moved the Apex Court claiming – in its writ petition – that the LTO has erroneously fixed its tax liability at Rs 39.06 billion. The Ncell has claimed the capital gains tax should be only at Rs 14 billion not Rs 39.06 billion.
Earlier on April 17, the LTO had assessed that the tax amount of Ncell buyout – after the Supreme Court's verdict two weeks to fix it – and served the telecom company a seven-day deadline to clear the remaining capital gains tax (CGT) amounting to Rs 39.06 billion – including interest and fine – by April 23.
The LTO has fixed a total payable tax – including CGT, fine and interest – at Rs 62.63 billion. The total CGT has been fixed at Rs 35.91 billion and fine and interest at Rs 18.33 billion and Rs 8.39 billion, respectively. But the Ncell has already paid the government a total of Rs 23.57 billion in two installments.
The Swedish Company TeliaSonera had sold its 80 per cent stake to the Malaysian Company Axiata for Rs 143.6 billion in April 11, 2016, as per an acquisition deal – the biggest in Nepal’s corporate sector – signed in December 2015. But – in its petition – Ncell has said that Rs 21.54 billion it paid earlier was 15 per cent of the total capital gains in the buyout deal amounting to Rs143.6 billion. "Of the 25 per cent tax liability, 15 per cent has been paid, and the rest 10 per cent means the company needs to pay Rs 14.36 billion," the foreign direct investor said in the petition, demanding an order of mandamus along that line to the tax authorities.
Ncell has also sought an order from the Supreme Court to the authorities not to create any kind of obstructions in Ncell’s business until the case is fully settled and tax is determined.
According to LTO, it has reassessed the tax as per the Apex Court verdict, which had told the tax offices to reassess the tax within three months. Following the Supreme Court verdict, the LTO had to change its previous assessment in which it had asked TeliaSonera – popularly known as Telia Company – the seller to pay the CGT. But the political and bureaucratic nexus made the TeliaSonera leave the country easily without paying CGT against the international norms and law that seller that makes gain pays the CGT.
The mishandling – with political bickering – of the Ncell case has sent a negative to the international investor that corruption is rampant in Nepal and they can bend the law as they wish.
Ncell has stated that the Court enjoys the extraordinary authority to 'settle the dispute' and 'provide necessary remedy' to resolve the tax dispute as the Apex Court's full-text verdict had concluded that the tax offices concerned didn't rightly claim taxes from the telecommunications company while the company's shares were sold to Axiata.
The court stated that Section 57 (1) of the Income Tax Act-2058 makes Ncell and Axiata responsible for paying the CGT and not TeliaSonera.
The LTO had last Tuesday written a letter to the Ncell mentioning it to pay remaining due of CGT. The Ncell has also received the LTO letter but it moved to the Supreme Court just a day before the deadline.

Government, World Bank launch new project to scale up renewable energy options

The government and the World Bank signed an agreement today to scale up renewable energy options in selected regions of Nepal in partnership with private sector. The agreement was signed by joint secretary at the Finance Ministry Shree Krishna Nepal and acting country manager Bigyan Pradhan on behalf of their respective institutions.
Total of $17.21 million will be spent during four-year period of the Private Sector-Led Mini-Grid Energy Access Project, of which the World Bank will finance total of $7.61 million (approximately Rs 845.2 million) through its Strategic Climate Fund (SCF) comprising of SCF Grant of $5.61 million and SCF soft loan of $2 million. Similarly, the government will contribute subsidy of $6 million and the remaining $3.60 million will be contributed by the private sector. The project will provide renewable energy to 126,000 rural people and support more than 80 businesses through micro/mini-hydro and solar subprojects in Nepal’s rural areas. The project will be implemented by the Alternative Energy Promotion Centre (AEPC), the government's nodal agency for renewable energy promotion in Nepal.
"We are thankful for the support of the World Bank in launching this milestone project to encourage commercial financing of renewable and off-grid energy systems in Nepal," Nepal said, adding that the project will demonstrate that the private sector led model is feasible in mini-grid development and the government is committed to engage private sector in development.
Under the Project, private entities and cooperatives will be mobilised to provide electricity services to rural areas as 'energy service companies' (ESCOs). These specialised ESCOs will crowd-in financing capacity to develop, build, own and operate renewable mini-grid projects. The commercial banks are a key partner who will assume credit risk of the subproject loans to ESCOs once they are eligible and selected to participate in the project by AEPC. The credit facility component of the project is in turn supported by a technical assistance component for stronger project development support to the mini-grid sector, ESCOs and partner banks to ensure sustainable implementation beyond the life of the project.
"Maximizing finance for development is an important element in Nepal’s growth trajectory,” said World Bank acting country manager for Nepal Bigyan Pradhan. "By encouraging the participation of the private sector, this project motivates a business approach to improve energy access while supporting the government’s efforts to provide clean and efficient energy options to rural communities," he added.
The government accords high priority on the renewable energy sector and the World Bank Group supports the government’s energy sector through investments in both grid and off-grid energy and energy efficiency programmes.
This project aims to support more than 25 mini-grid subprojects and add new generation capacity of 3.8 MW, while rehabilitating and restoring the capacity of existing mini-grids.
The improved policy environment through the government’s Renewable Energy Subsidy Policy 2016 and the effective implementation of this project are expected to create opportunities for this model to succeed in providing energy access to Nepal’s rural areas.