Thursday, February 7, 2019

CGT is seller’s responsibility: Axiata

The owner of Ncell – Axiata Group – has claimed that it has no additional obligation to pay Capital Gain Tax (CGT) to Nepal government. Issuing a press note today the Malaysian telecommunications service provider claimed that the responsibility of paying CGT lied with the seller from which it acquired Ncell.
The press note in its website reads that Ncell has already made full and final payment and they were also given a full clearance by the Large Taxpayers Office (LTO) of Nepal, though the press note does not mention the amount it paid.
The company – responding to the news reports about a court verdict of Nepal – further argued that Ncell, Reynolds Holdings Ltd, and Axiata UK were given the full clearance by the tax office of Nepal of its obligations to withhold any CGT payment on behalf of seller in relation to the transactions via the letter of LTO dated 4 June, 2017.
The Supreme Court yesterday had issued a verdict asking the government to make Ncell and Axiata pay the CGT. Though the Apex Court verdict is expected to end the debate over whether the seller or the buyer should pay the CGT in a share transaction of $1.03 billion, the case seems to create further confusion in the foreign investor community.
The company has also repeated its argument that the seller – Telia, a Swedish public company – has the responsibility to pay the remaining tax amount. "The CGT is not applicable on offshore transactions and if applicable, any shortfall on payment was the responsibility of the seller," the press note in the company website reads.
The surprising angle of the largest transaction ever of Nepal is that TeliaSonera – currently Telia – is a listed public company of Scandinavian country that teaches transparency and accountability the third world countries like Nepal. The Scandinavian company chose a offshore dealing to move in and out of Nepal.
However, the Malaysian company said that it issued the statement on the basis of media reports as it had not yet received any official statement or verdict from the court. The Supreme Court is yet to issue the full text of the verdict.
Though, LTO is also waiting for full text of the Supreme Court verdict to make a final calculation, it claimed that Ncell and Axiata have to pay Rs 61 billion, as of June 2017, apart from additional applicable fines and interest for the delays. Ncell has already paid Rs 24 billion in CGT. Raynolds is the 80 per cent parent company of Ncell, and Axiata had purchased Reynolds Holdings in 2015 April.

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