Large Taxpayer’s Office (LTO) on Tuesday said the Ncell acquisition deal is subject to capital gains tax (CGT) according to the Income Tax Act of Nepal.

In a recently-concluded record deal, Malaysia’s telecommunication giant Axiata bought Reynolds Holding, which held a 80 percent stake in Ncell, from Swedish-Finnish company TeliaSonera (now Telia Company) at an enterprise value of $1.03 billion. Reynolds Holding was TeliaSonera’s wholly-owned subsidiary, registered at Saint Kitts and Nevis, a tax haven.

According to section-95 of the Income Tax Act, it is Ncell’s responsibility to recover and submit the applicable CGT to the tax office and the LTO has written to Ncell mentioning the same, the LTO said in a statement.

As Ncell on Sunday paid Rs9.96 billion to the LTO as tax deduction as source (TDS), claiming the amount is 15 of the 25 percent of the CGT, there is no confusion regarding the CGT issue in the deal, read the LTO statement. 

The LTO, however, is yet to figure out if the amount declared by Ncell is correct. LTO officials have siad an investigation will be carried out immediately.

In the statement, the tax office also dismissed media reports about the difference of opinion among government officials in bringing the deal to the tax bracket.  

LTO chief Shova Kanta Poudel told the Post the tax office issued the statement to clear confusion among the general public regarding the CGT issue. The statement said the LTO and the entire tax administration of the Nepal government is committed to levying CTG to the Ncell deal.