The Public Accounts Committee (PAC) of the Legislature Parliament has decided to summon communications minister and secretary, and the head of the telecom sector regulatory body to discuss the issue of prohibiting Ncell from introducing 4G service unless capital gains tax issue is resolved.

The parliamentary committee took this decision as a majority of parliamentarians present during Sunday’s meeting said the leading telecommunications service provider should be barred from introducing 4G service unless capital gain tax issue is settled.

However, the date for the meeting with Information and Communications Minister Surendra Kumar Karki, Information and Communications Secretary Mahendra Man Gurung and Chairman of Nepal Telecommunications Authority (NTA) Digambar Jha has not been fixed yet.

“Ncell is yet to pay Rs23 billion in capital gains tax. The government can develop one hydropower project each in 23 districts and end load-shedding from the country with this money,” Nepali Congress parliamentarian Ram Hari Khatiwada said. “Why should the government allow a company like Ncell to operate 4G service?”

A number of PAC members also echoed Khatiwada, compelling PAC Chairman Sarbendra Nath Shukla to summon communications minister and secretary, and the head of the telecom sector regulator.

Most of the parliamentarians were of the view that the committee should direct relevant agencies to bar Ncell from acquiring a 4G license on Sunday itself.

“Since this issue is not in today’s agenda, we should wait until we hold a meeting with stakeholders,” Shukla said. Earlier, the Finance Committee of Legislature Parliament too had directed the NTA not to award any kind of license to Ncell before the capital gains tax issue is settled.

Private telecom operator Ncell hasn’t obtained permission to operate 4G service till date, although its rival state-run Nepal Telecom launched the service in pilot phase on January 1.

Ncell had sought permission from the NTA to launch 4G service in July from its existing frequency of 1800 MHz.

According to NTA Chairman Jha, the regulator hasn’t awarded 4G license to Ncell. “We will abide by the directives of parliamentary committees,” Jha said.

In the biggest acquisition deal in Nepali history, Axiata, a Malaysian telecom company, last year, acquired 80 percent stake in Ncell for Rs140 billion ($1.4 billion). Axiata had acquired 60.4 percent of Ncell’s stake from TeliaSonera, a telecommunications service provider in the Nordic and Baltic countries, Eurasia and Spain, and another 19.6 percent stake under ownership of SEA Telecom Investments BV, a company owned by Kazakhstan-based Visor.

Since then the sellers have exited the country, forcing the taxman to communicate with Ncell to obtain capital gains tax from the buyout deal.

During Sunday’s PAC meeting, Inland Revenue Department (IRD) Director General Chudamani Sharma said it would take around three months for them to take a position on capital gains tax issue.

“Ncell submitted its income details in mid-August. We will be able to make our position clear after analysing the data,” Sharma said. “We won’t allow the company to evade a single penny in tax or charge anything extra.”

MoF told to recover tax within three months

KATHMANDU: The Public Accounts Committee (PAC) of Legislature Parliament on Sunday directed the Ministry of Finance (MoF) to recover capital gains tax from Ncell buyout deal within three months by evaluating the applicable tax. The committee has also directed the ministry provide updates on the tax issue every month.

The issue related with capital gains tax, according to PAC, comes under the purview of the MoF and it should take the responsibility to fix the tax amount.

Finance Secretary Shanta Raj Subedi said the ministry and its line agencies have been looking at several aspects of the issue, including the international law. He said MoF officials have also been consulting with international consultants who had drafted the Income Tax Act 2002. “We need to be prepared in such a way that the government wins the case even if the company (Ncell) moves the court,” Subedi said.  

The PAC, meanwhile, has reminded the Commission for the Investigation of Abuse of Authority, about a directive issued by the PAC previously that called on the corruption watchdog to launch investigations into officials and institutions who had failed to recover capital gains tax from Ncell and submit a report on it to the committee soon. (PR)