Ncell files Rs9.96b in CG tax returnSuccumbing to steady pressure from various stakeholders, Ncell, a privately owned telecom company, on Sunday filed the tax return and paid 15 out of 25 percent of capital gains tax (CGT) on the behalf of its previous owner TeliaSonera.
Succumbing to steady pressure from various stakeholders, Ncell, a privately owned telecom company, on Sunday filed the tax return and paid 15 out of 25 percent of capital gains tax (CGT) on the behalf of its previous owner TeliaSonera.
Chief of Large Taxpayer’s Office (LTO) Shova Kanta Poudel told the Post that Ncell paid Rs9.96 billion as tax deduction as source (TDS) claiming the amount to be 15 of the 25 percent of CGT.
“We will recover the remaining 10 out of 25 percent of CGT from TeliaSonera,” said Poudel. “We will reach out to them through Axiata, the current owner of Ncell.”
As per the Income Tax Act foreign investors are liable to pay 25 percent as CGT. “It is buyers’ responsibility to deduct 15 out of 25 percent as TDS,” he said.
In a statement released on Sunday, Ncell said it has responded positively to the LTO directive and made a deposit of 15 percent of the gains of TeliaSonera arising from the sale of shares of offshore company Reynolds Holding—the 80 percent shareholder of Ncell—to Axiata.
Ncell has been under intense pressure from various stakeholders to pay the CGT. Nepali Congress lawmaker Gagan Thapa registered a motion of public importance at the Parliamentary Secretariat demanding Parliament’s instruction in this regard.
Naya Shakti, a new political party under former prime minister Baburam Bhattarai, had warned of a campaign to boycott Ncell if the company does not pay the tax. A team of former administrators and civil society leaders, including former chief secretaries Leela Mani Paudyal and Bimal Koirala, launched campaign against Ncell in order to bring the deal under the tax bracket. “No tax, No Ncell” campaign was launched in social media.
Meanwhile, LTO chief Poudel said the tax office is yet to determine if the amount deposited by Ncell is correct. “We will immediately examine and figure out if the amount declared by Ncell is true,” he added.
Although TeliaSonera, being a seller is subjected to pay CGT to Nepal government, the LTO has got hold of Ncell as the former has already left the country.
In a record deal struck in April, Malaysia’s Axiata bought Reynolds Holding, which held a majority stake in Ncell, from Swedish-Finnish company TeliaSonera at an enterprise value of $1.03 billion (approx Rs103 billion). Reynolds Holding was TeliaSonera’s wholly-owned subsidiary, registered at Saint Kitts and Nevis, a tax haven.
The tax authority initiated a process to tax the transaction only after Teliasonera exited Nepal.
The LTO had initially written to TeliaSonera, asking it to submit tax details, but the company argued the deal is not taxable in Nepal. Following such answer from TeliaSonera, the LTO asked Ncell to file tax return by May 7.
The deadline was automatically postponed to Sunday as it was public holiday on Saturday. As per the Income Tax Act, the taxpayer should submit the tax returns within 25th day of the following month from the month of transactions.
“As Ncell filed the TDS we have won the argument in principle,” said Poudel. “However, lot more needs to be done at operational level,” said the LTO chief, indicating to an investigation of Ncell’s declaration by the tax office.