Ncell, a privately owned telecommunications company, has made a part-payment of Rs4.5 billion to the tax authority as part of its outstanding capital gain tax liability, the Large Taxpayers’ Office said on Tuesday.
After a prolonged court battle, the Supreme Court on November 21 determined the tax to be paid by Ncell at Rs21.1 billion.
On December 6, the Large Taxpayers’ Office determined capital gains tax at Rs 22.44 billion including fines and ordered Ncell to pay up by December 19. After the company missed the deadline, the tax office on December 22 wrote a follow-up letter to Ncell, asking it to clear the dues within 15 days along with a warning to the company that upon its failure to do so, it would be subjected to fines on the top of the outstanding tax.
“Ncell paid us Rs4.5 billion on Tuesday. The company has also requested us that it be allowed to pay its outstanding tax on an installment basis,” said Jhalakram Adhikari, chief of the Large Taxpayers’ Office.
As per section 110 (A) of the Income Tax Act, the tax officer can provide the facility of paying outstanding tax on an installment basis, if the taxpayer makes a written request for such a facility before the tax office files a case in court against such taxpayer.
“We have asked Ncell to submit the timeline of paying their outstanding taxes on installment basis within the current fiscal year,” said Adhikari.
According to Adhikari, the total tax liability of Ncell reached Rs22.68 billion as of Tuesday, up from Rs 22.44 billion initially determined because of 15 percent fines imposed on the company for the delay.
Before the company paid the first installment of outstanding dues on Tuesday, there was confusion over whether the company would indeed pay the amount after the International Centre for Settlement of Investment Disputes on December 18 issued a provisional order barring Nepal’s tax authority to recover its outstanding dues from the Ncell.
International Centre for Settlement of Investment Disputes is the World Bank’s dispute settlement body on international investment.
Ncell, along with Axiata (UK), which now owns Reynolds Holding, filed an application in April, at the global investment settlement body, claiming that Nepal’s conduct in relation to capital gains tax imposed on the mobile company is against the Bilateral Investment Treaty between Nepal and the United Kingdom.
The latest payment of tax from Ncell has taken place at a time when the Nepal Telecommunications Authority granted 1800 megahertz band to Ncell in an auction on the condition it clears all its outstanding tax dues. The decision of the authority to allow Ncell in the auction despite its tax dues had generated controversy.
Prithvi Man Shrestha is a political reporter for The Kathmandu Post, covering the governance-related issues including corruption and irregularities in the government machinery. Before joining The Kathmandu Post in 2009, he worked at nepalnews.com and Rising Nepal primarily covering the issues of political and economic affairs for three years.
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