Public Accounts Committee (PAC) of the Legislature-Parliament has sought information from Nepal Telecommunications Authority (NTA) in relation to 4G licence issuance to Ncell. 

The PAC move follows the telecommunications sector regulator’s recent decision to issue 4G licence to the second largest telecom service provider in the country. 

“We have learned about Ncell 4G service through the media only. Hence, we have formally asked the NTA to inform us about the development,” PAC Secretary Surendra Aryal said, adding that the house committee has asked the NTA to respond by Sunday. “If Ncell has been allowed to extend service, we have asked the NTA to clarify the basis on which the decision was taken.” In January, PAC had directed the Ministry of Information and Communications (MoIC) and the NTA not to allow Ncell to introduce 4G and other services until its capital gains tax issue is resolved. 

PAC is of the view that service providers need to obtain tax clearance certificate before obtaining government approval to extend service. 

However, the Development Committee of Parliament had recently directed the government not to bar Ncell from rolling out 4G service, stating that it is against the right of the general consumers to use modern technology. Based on this directive, the telecom sector regulator gave the nod to Ncell to extend its service. The decision made by the Development Committee had raised many an eyebrow as PAC had barred government from making such a move. Likewise, the move has also reignited the discussion regarding jurisdiction of different house committees. 

In the biggest corporate buyout deal in Nepal, TeliaSonera, a Swedish telecom giant, had sold its stakes in Ncell to the Malaysian company Axiata for $1.03 billion in 2015. The government has clearly said 25 percent of the profit made from the sale of Ncell should be deposited as capital gains tax. Ever since the deal took place, the government has been saying tax would be levied on the transaction, but it has not mentioned the amount that needs to be collected. Following pressure from the government, Ncell has so far deposited Rs 9.97 billion as 15 percent withholding tax, or tax-deductible at source for the capital gains. The payment of this tax amount means the seller earned Rs66.46 billion by disposing its ownership in the telecom company. This tax amount was calculated by Ncell itself.

Meanwhile, the Large Taxpayers’ Office (LTO), which is supposed to clarify the government position on the capital gains tax of Ncell, is assessing the issue and is likely to reach a conclusion soon.