The Public Accounts Committee (PAC) of Parliament on Thursday decided to summon Prime Minister Pushpa Kamal Dahal over the capital gains tax (CTG) controversy surrounding Ncell, the largest private telecom operator in the country. 

The PAC decision to summon PM Dahal was taken after a statement by DPM and Finance Minister Krishna Bahadur Mahara that the tax issue was discussed during a recent Cabinet meeting “at the insistence of PM Dahal”. The date is yet to be fixed.

During a meeting with Finance Minister Mahara and Revenue Secretary Rajan Khanal on Thursday, the House committee sought details of the March 8 Cabinet decision to levy CGT on TeliaSonera—Ncell’s parent company which sold its majority stakes in the telecom company to Axiata, a Malaysian telecom giant, last year. TeliaSonera has already left the country. 

In response to lawmakers’ queries, Finance Minister Mahara told PAC that tax issue was discussed after the prime minister sought information. According to Mahara, Ncell has written to the Office of the Prime Minister (PMO) attaching copies of a decisions made by PAC as well as the parliamentary Finance Committee and Development Committee and sought clarity on the tax issue. 

“Based on the application, the prime minister spoke to me during the Cabinet meeting. The matter was discussed only; no decision was taken,” Mahara said. 

According to Mahara, a number of prospective investors had sought to know about Ncell tax issue on the sidelines of the Nepal Investment Summit held on March 1-2. PM Dahal himself had received some queries and that could have prompted him to take initiative to resolve the matter, he said. 

As many as 17 parliamentarians who aired their views during Thursday’s PAC meeting criticised the PM’s actions, saying such conduct could wreck the country’s governance system.

“This issue is turning into biggest corruption scandal of Nepal. Is it right for the PM to intervene in a matter to be taken care of by a tax officer?” Nepali Congress lawmaker Ram Hari Khatiwada questioned. Inland Revenue Department Director General Chudamani Sharma informed PAC that the government would clear its position over capital gains tax by mid-May. The government on March 3 sought relevant documents from several stakeholders. 

Axiata acquired 60.4 percent of Ncell’s shares from TeliaSonera, a telecommunications service provider in the Nordic and Baltic countries, Eurasia and Spain, and another 19.6 percent from SEA Telecom Investments BV, a company owned by Kazakhstan-based Visor.

PAC is of the view that the government should collect Rs 23 billion from TeliaSonera in the CGT. 

Ncell has deposited Rs 9.97 billion as 15 percent withholding tax, or tax deductible at source for capital gains. Tax authorities are undecided about the actual amount to be paid by TeliaSonera.

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