Tuesday, April 16, 2019

LTO orders Ncell to pay Rs 39.06 billion within a week

The Large Taxpayers’ Office (LTO) today asked the telecommunications service provider Ncell to pay Rs 39.06 billion within seven days, after officially determining Rs 62.63 billion as applicable capital gains tax (CGT) on its buyout deal. Of the total tax – the LTO has determined – Ncell has already deposited Rs 23.57 billion as CGT and late fee, and the remaining amount has to be deposited within a week, according to a press note issued by the tax authority.
The LTO ordered – writing an official letter – the Ncell to clear the dues within a week, after the Supreme Court last week released the full text of its verdict of February 6. The Apex Court has – in its full text – ordered the government to recover applicable CGT on the corporate deal from Ncell and its Malaysian-based parent company Axiata within three months.
"The Ncell has received CGT determination and direction letter from LTO today,” the press release further reads, adding that Ncell should pay 25 per cent of the profit made in the buyout deal, which is equivalent to Rs 35.91 billion as CGT, apart from interest worth Rs 8.4 billion and late fee worth Rs 18.3 billion. "The total applicable CGT on the Ncell buyout deal stands at Rs 62.63 billion but the company has already paid Rs Rs 23.57 billion."
Ncell had already paid Rs 23.57 billion in total – Rs 21.54 billion as CGT and Rs 2.02 billion as fine – the telecom company should now pay the remaining Rs 39.06 billion," it reads.
Responding to public interest litigation filed by a group of civil society members led by former secretary Dwarika Nath Dhungel, the Apex Court in the first week of February ordered Ncell and Axiata to clear the outstanding CGT. However, the full text of the verdict was released only last week, in which the Supreme Court ordered government authorities to recoup the outstanding CGT from Ncell and Axiata within three months. The Court has also barred the company from repatriating profit and distributing dividend and transferring shares until the dues were cleared.
The Apex Court has made it clear that onus to pay CGT lay with Ncell and not TeliaSonera. The Supreme Court verdict had put an end to the long-drawn-out debate over whether the buyer should pay the tax when the seller does not clear its tax liability, though Ncell has reiterated its stand that the seller TeliaSonera is responsible to pay the CGT as is the international practice.
The tax office further said in its press note that after TeliaSonera sold its share to Axiata on April 11, 2016, the capital gains tax was settled at Rs 143.65 billion On June 27, 2017, the tax authority had fixed the capital gains tax of Rs 60.71 billion to be recovered from TeliaSonera. But the tax authority had initiated the process to collect CGT in the deal after TeliaSonera exited Nepal, which sent the issue to the court.
TeliaSoera is a listed company of Norway and Sweden – the first world countries that teaches transparency to the rest of the world – and the listed company in the first world has not only a nexus with shell company but also it runs away from a third world country like Nepal without paying tax. "Though we were keeping an eye on TeliaSonera and its chief executive, pressure from the political front made us let the company exit Nepal," said the tax officials –without wanting tobe named – who were involved in the investigation of the deal between TeliaSonera and Axiata, since the December 2015. 
Axiata Group Berhad, through its wholly-owned subsidiary, Axiata Investments (UK) Ltd, had bought 80 per cent stake in Ncell for $1.4 billion in December 2015. Initially, the foreign investment in Ncell had come from a shell company called Reynolds Holdings registered in Saint Kitts and Nevis in the West Indies. TeliaSonera Norway Nepal had 75.45 per cent stake in Reynolds and the remaining 24.55 per cent shares in the shell company were held by SEA Telecom Investments BV, a company owned by Kazakhstan-based Visor. 

No comments: