Monday, April 22, 2019

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.

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