Kathmandu, January 10

Following the Supreme Court’s verdict to allow the private telecommunication service provider Ncell  to repatriate its profit, Nepal Rastra Bank (NRB) — the central regulatory and monetary authority — has approved profit repatriation of Rs eight billion, today.

Deputy Governor Chinta Mani Shiwakoti confirmed that the profit repatriation of fiscal 2015-16, worth Rs eight billion, has been approved and Ncell can repatriate Rs 7.6 billion after filing five per cent tax from the approved amount.

As a custodian of foreign currency reserve, NRB had blocked the profit repatriation citing that TeliaSonera (the previous owner of Ncell) had not cleared the applicable capital gains tax on the sale of Ncell’s share to Malaysian telecommunication giant Axiata.

However, the apex court, on December 24, issued a verdict to allow Axiata — the current owner of Ncell — to repatriate the profit citing that the tax liability is related to TeliaSonera, which had sold its share. The tax administration has yet to collect 10 per cent out of the 25 per cent applicable capital gains tax from the Ncell deal, which was the largest ever corporate deal worth $1.36 billion in the country.

As per the capital gains tax rules, the acquirer needs to submit 15 per cent of capital gains tax as tax deduction at source (TDS), which it can show as TDS while making payment to the selling firm or person.

NRB has to approve all cases of  profit repatriation by foreign investment companies. The foreign company needs to take clearance from the Department of Industry, regulating authority, tax administration (tax clearance certificate) and present bank statement showing capital has been transferred into the country as per foreign investment commitment of the concerned party.

The central bank had given clearance to Ncell’s profit repatriation of fiscal 2012-13 worth Rs 8.36 billion in October 2016, when the

Malaysian giant had already acquired the 80 per cent stake in the company, but the capital gains tax issue had remained.

Ncell has set aside Rs 20 billion as profit repatriation of fiscal 2016-17. The central bank officials have said that they cannot block the profit repatriation as the court has issued a verdict on it.