Govt told to recover CGT by mid-April
Kathmandu, April 9
The Public Accounts Committee of the Legislature-Parliament today instructed the government to recover the capital gains tax that was to be levied on the Ncell deal between TeliaSonera and Axiata Group by mid-April.
The parliamentary panel today summoned Prime Minister Pushpa Kamal Dahal and reminded him of the panel’s instruction to the government issued on January 15 to recover the CGT within three months.
In the House panel meeting, lawmakers questioned the delay by the government in recovering the CGT from the biggest corporate deal the country has seen despite frequent instructions by the parliamentary panel. The panel has already given instructions seven times in the last one year following the sale and purchase agreement of Ncell’s stake between Swedish-Finnish company TeliaSonera and Malaysian telecommunication giant Axiata. TeliaSonera and another co-owner Visor had sold 60.4 per cent and 19.6 per cent of their respective stakes in Ncell at $1.365 billion in April 2016. However, the tax authorities have yet to determine the CGT and the party liable to pay the tax.
In the meeting today, Prime Minister Dahal expressed commitment to recover CGT on the Ncell deal at any cost as per the provision of Income Tax Act. “The government is investigating why TeliaSonera was allowed to leave the country without paying its tax dues.”
The controversy surrounding CGT has been going on since the deal was inked last year and a Cabinet meeting held last month discussed whether or not to make TeliaSonera liable to pay CGT. Lawmakers in the House panel meeting expressed concerns about the Cabinet’s move to intervene in the CGT issue. They stated that CGT was under the tax officer’s jurisdiction extended by the Income Tax law.
TeliaSonera, which divested 80 per cent of its shares in Ncell, had purchased a majority of the stake of Spice Nepal in September 2008 at a total cost of Rs 1.12 billion. It, however, sold its stake at Rs 143 billion. The selling company has to pay 25 per cent CGT as per the income tax law of the country. Of the 25 per cent of the CGT, it is the responsibility of the acquiring company to directly pay 15 per cent of the CGT to the government as tax deducted at source and the remaining 10 per cent needs to be filed by the selling company itself.
Axiata, which acquired Ncell, paid Rs 9.96 billion as TDS to the tax office in May and has been claiming that it is an amount worth 15 per cent of the 25 per cent CGT. However, tax authorities have not re-evaluated the asset and liability of the telecom service provider following its ownership change to determine the taxable amount.