Days after tax authorities asked Sweden-based Telia to clear its tax liability on the Ncell buyout deal, the European telecommunications giant said that it wasn’t required to pay taxes in Nepal. 

The Large Taxpayers’ Office (LTO) under the Inland Revenue Department (IRD) had served a 15-day notice on Telia on Sunday telling it to settle the outstanding tax debt by assessing the amount itself. 

“Nepali tax authorities recently sent a letter to Telia Company requesting it to pay tax on the foreign portion of the transaction,” Telia posted on its website on Wednesday. “The letter does not change Telia Company’s position that all tax requirements were met when Ncell was divested.”

Recalling that Swedish and international media had recently reported on taxes paid by Ncell, Telia said that it divested Ncell in April 2016, and all questions about present tax payments should be referred to Ncell and its new owner Axiata. 

“Telia Company met all tax requirements on the Nepalese operation Ncell during the years 2008-2016, and in relation to the sale of the subsidiary in 2016 to Axiata,” the company headquartered in Sweden said. 

Tax authorities in Nepal had warned Telia to settle the tax debt by assessing the amount itself or they would calculate the tax amount and direct the company to pay it if it failed to respond within 15 days. 

Telia sold its 80 percent stake in Ncell to Axiata for $1.03 billion (Rs103 billion) in December 2015. It is estimated that Telia owes around Rs36 billion in capital gains tax in Nepal. As per tax laws, 25 percent of the profit made from the buyout deal must be deposited in the form of capital gains tax.

Since Telia has failed to deposit the tax amount at the time the asset was sold, the taxman here holds the right to impose a fine equivalent to 50 percent of the tax amount, officials said. On top of this, the taxman can levy 15 percent interest per annum on the outstanding tax debt.

If the fine and interest are added, Telia will have to pay around Rs61.61 billion to the government. However, Telia may not have to bear the entire financial burden, as Ncell has already paid 15 percent of the tax on behalf of the Swedish-based company. 

Ncell has so far deposited Rs23.6 billion at the tax office of which Rs9.97 billion was deposited in May 2016 and Rs13.6 billion last Sunday. Out of this amount, Rs2.1 billion covered the fine imposed against the company by the tax office for delayed payment.

The taxman has stated that Telia can choose to pay the tax debt on its own or jointly with Ncell. If Telia goes for the first option, it will have to pay around Rs61.61 billion. Under the second option, it will have to pay around Rs48.13 billion in total. This amount includes fine and interest.

This is not the first time Telia has stated that it has no tax liability in Nepal. 

On April 3, the company had argued that taxes on the Ncell buyout deal should be declared in Norway, the home country of the seller TeliaSonera Norge Nepal Holding AS (TSNN), which Telia co-owns with Visor.”