LTO reassesses Ncell’s CGT liability at Rs 60 billion

Kathmandu, January 3

At a time when it was believed that the issue of capital gains tax on the transfer of ownership of Ncell from TeliaSonera to Axiata had already been settled, the Large Taxpayers’ Office recently reassessed the tax amount based on Section 57 on the Income Tax Act.

Arjun Dhakal, information officer of Inland Revenue Department, said this was just a reassessment of tax as the amount paid earlier was not accurate. An initial letter has been sent to the company and the department is preparing to send the formal letter soon, he said. “In the case of large taxpayers, sometimes reassessment of taxes is done. The tax amount determined earlier was inaccurate, so the notice of tax reassessment has been sent to Ncell,” he had told The Himalayan Times earlier.

The reassessed tax amount for ownership transfer is around Rs 60 billion for Ncell. However, today Dhakal could not be contacted despite several attempts to get further details on this issue.

Meanwhile, the phone of Baburam Gautam, the chief administrator of LTO, was switched off. Axiata Investments (UK) and Ncell had moved the international dispute settlement court in April after LTO asked Ncell to foot the capital gains tax bill of Rs 62.63 billion on the Ncell buyout deal.

At that time, Ncell had already paid Rs 23.57 billion to the government but tax authorities were exerting pressure on the company to settle the outstanding tax liability of Rs 39.06 billion immediately. Thereafter, the company had moved the Supreme Court and the outstanding tax liability was reduced to Rs 22.4 billion, which was then cleared in instalments.

Should the company comply with the recent reassessment, it would have to pay an additional Rs 13.99 billion to be in the clear for the ownership transfer.

Ncell said it could not give any official statement till it got a formal letter from the authority. According to Senior Advocate Gandhi Pandit, the government does have the authority to reassess taxes in cases of ownership transfer. “If the government is not convinced with the previous tax assessment, it can reassess the tax amount,” he said, “In the case of large taxpayers, the government has done this several times. The government can increase the tax amount later if the taxpayer paid less than the actual taxable amount,” said Gandhi. He added that the taxpayer can appeal the decision at the Revenue Tribunal.