Ncell deposits Rs 9.97 bn in state coffers

Ncell deposits Rs 9.97 bn in state coffers

Ncell, the largest private telecom company in Nepal, today transferred Rs 9.97 billion to the state coffers, as per the instructions issued by the government to pay applicable capital gains tax on Ncell buyout deal.

The amount deposited today, as per Ncell, is 15 per cent of the gains made by TeliaSonera while selling Ncell to Malaysian telecom giant, Axiata.

“Yes, Ncell has deposited the amount,” a senior official of the Large Taxpayers’ Office told THT on condition of anonymity. “The amount was extended based on tax liabilities estimated by Ncell. We’ll now check whether the assessment is correct and make comments.”

Earlier, the LTO had directed Ncell to deposit 15 per cent of the withholding tax, or the tax deductible at source for capital gains, by today. Another 10 per cent of the gains made from the transaction must be deposited by TeliaSonera.

Although the tax burden on buyout deals does not rest on buyer’s shoulders, Ncell had decided to bear the responsibility to quash rumours that attempts were being made to evade taxes to the tune of tens of billions of rupees.

“Ncell is one of the largest taxpayers in Nepal, and has consistently complied with the laws of the country. It has also exercised the highest standards of governance and compliance pertaining to the fulfilment of tax obligations,” Ncell said in a statement.

Yet Ncell is still reiterating that the capital gains tax should be paid by TeliaSonera, which sold its stake in Ncell and generated profit. Today, Ncell Managing Director Simon Perkins expressed the same view while talking to journalists.

The controversy over capital gains tax in Ncell deal surfaced in December when Axiata Group Berhad, through its wholly-owned subsidiary, Axiata Investments (UK)

Limited, entered into a ‘conditional sale and purchase agreement’ with TeliaSonera UTA Holdings BV and SEA Telecom Investments BV to acquire 80 per cent stake in Ncell for US$1.365 billion.

To ascertain whether the deal was subject to capital gains tax, Axiata then sought advance tax ruling from the Inland Revenue Department.

“The reason why we asked for the ruling was to avoid the situation that we are facing now because tax laws could be interpreted in many ways.

However, many government officials, including very senior ones, told Axiata then that no tax was payable. We still wanted certainty (and asked for something) in writing. But government officials decided not to give that.

However, verbally, they continued to say no tax is payable,” Perkins said, adding, “So, when the letter arrived from the LTO (demanding submission of estimate for capital gains) a day after we closed the transaction, it was a major surprise for everybody.”

Source: THT