Kathmandu, December 22

The Large Taxpayers Office today gave an ultimatum to the private telecom firm Ncell to clear its outstanding capital gains tax dues within 15 days.

Interestingly, LTO’s ultimatum to Ncell to clear the taxes came on the same day that the tax office received an official letter from an international investment dispute settlement court asking it not to initiate CGT collection process from Ncell.

Issuing an interim order last week, the International Centre for Settlement of Investment Disputes had directed the government not to ‘take any steps’ to enforce its decision to collect Rs 22.4 billion in outstanding capital gains tax, including interest and penalties, from the sale of Ncell by TeliaSonera Norway to Axiata UK. The LTO officially received ICSID’s order today. Though taxmen at the LTO said ICSID’s letter would be discussed with the government, LTO, contrary to ICSID’s directive, directed Ncell to clear the outstanding CGT dues.

Based on the verdict of the Supreme Court, the LTO had asked Ncell to deposit Rs 22.44 billion remaining CGT within 15 days on December 8. However, as the telecom company did not pay the said amount within the stipulated time, the LTO today asked Ncell to deposit Rs 22.6 billion tax dues, including interest and late fees.

Unlike previous letters that the tax office had sent to Ncell asking the company to deposit the outstanding CGT due amount, the letter sent today also states that the government will initiate action against Ncell on the basis of the Income Tax Act if it fails to clear its tax dues within the given deadline, Jhalak Ram Adhikari, chief tax administrator at LTO, said.

“If the company does not clear applicable CGT within the given timeframe this time, we will initiate action based on provisions mentioned from Section 104 to 109 of the Income Tax Act,” informed Adhikari.

Experts say that the interim order issued by ICSID is obligatory for countries that are its members based on previous tribunals, hence the government’s move to collect outstanding CGT from Ncell amid ICSID’s interim order is certain to further complicate the Ncell CGT issue.

However, Adhikari said the LTO was holding consultations regarding ICSID’s letter and its order with the Ministry of Finance and the Office of the Attorney General.