Nepal | July 06, 2020

SC orders Axiata, Ncell to foot tax bill of over Rs 61 billion

Ram Kumar Kamat/Sujan Dhungana
Share Now:

Photo: THT

Kathmandu, February 6

Ncell and its parent company, Axiata, must foot a tax bill of Rs 61 billion, excluding late fees and fines, as the Supreme Court today directed the two companies to pay the due capital gains tax on Ncell buyout deal.

The verdict issued by the grand full bench of the apex court has put an end to the years-long controversy over who should foot the tax bill following the sale of Ncell by Sweden-based Telia to Malaysia-based Axiata.

This court order has paved the way for the Large Taxpayers’ Office to collect capital gains tax dues from Ncell and Axiata, LTO chief Dhani Ram Sharma told THT.

He, however, said the LTO was yet to receive the court verdict. “Once we get the copy of the verdict, we’ll initiate the process of collecting the due tax amount by writing letters to both Ncell and Axiata,” said Sharma.

The Ncell buyout deal was subject to capital gains tax of around Rs 61 billion, according to the LTO. “But the two companies may have to pay around Rs 66 billion in taxes if late fees are factored in,” said Sharma.

But Ncell and Axiata will not have to pay the entire Rs 66 billion, as Ncell has already paid tax instalments totalling Rs 21 billion, said Sharma. “Despite this, we’ll ask the telecommunications giant to deposit the entire Rs 66 billion. We’ll deduct Rs 21 billion only after Ncell and Axiata file a formal application demanding reduction in the tax bill,” added Sharma.

The LTO had determined the capital gains tax on Ncell buyout deal based on its own calculation. The LTO had to resort to this measure as the companies that sold Ncell did not provide details of profit generated from the buyout deal.

Companies that divest shares are given four years to submit that information to the taxman. This means details of profit generated from the deal must be submitted within this December.

Axiata Group Berhad, through its wholly-owned subsidiary, Axiata Investments (UK) Limited, bought 80 per cent stake in Ncell for $1.4 billion in December 2015.

Earlier, there were debates on whether capital gains tax should be imposed on Ncell buyout deal, as it was argued that the deal took place abroad and the Income Tax Act does not have clear provisions on offshore deals.

The foreign investment in Ncell had come from a shell company called Reynolds Holdings registered in Saint Kitts and Nevis in the West Indies.

TeliaSonera Norway Nepal had 75.45 per cent stake in Reynolds and the remaining 24.55 per cent shares in the shell company were held by SEA Telecom Investments BV, a company owned by Kazakhstan-based Visor.

The order was issued by a grand full bench of Supreme Court led by Chief Justice Cholendra Shumsher JB Rana responding to public interest litigation filed by former secretary Dwarikanath Dhungel and others.

Other members of the bench are justices Meera Khadka, Bishwambhar Prasad Shrestha, Ananda Mohan Bhattarai and Tanka Bahadur Moktan.


A version of this article appears in print on February 07, 2019 of The Himalayan Times.

Follow The Himalayan Times on Twitter and Facebook

Recommended Stories:

More from The Himalayan Times:

Commission for the Investigation of Abuse of Authority (CIAA) building

Engineer booked for accumulating illegal assets

KATHMANDU, JULY 4 The Commission for the Investigation of Abuse of Authority yesterday filed a charge-sheet at the Special Court against Bharat Raj Acharya, an engineer at the Department of Roads. He has been charged with accumulating disproportionate assets worth around Rs 32.2 million. Ac Read More...

Pokhara International Airport

60 per cent work of Pokhara Regional International Airport completed

POKHARA, JULY 4 Almost 60 per cent construction work of Pokhara Regional International Airport has been completed. The China-based CAMC Engineering Company has been entrusted with the contract to complete the project by 10 July 2021. The estimated project cost is Rs 22 billion. Construction of Read More...

COVID victim’s body laid to rest amid obstruction

DAMAULI, JULY 4 After 12-hour obstruction by the locals, a body of 44-year-old man who died of COVID-19, was laid to rest in Ludi Dobhan, bordering Sahid Lakhan Rural Municipality and Gorkha Municipality in Gorkha at 6:00pm today. The man had died in Gorkha Hospital at 5:00am today. CDO Surend Read More...

Lockdown tightened in Lamjung

LAMJUNG, JULY 4 Lamjung District COVID-19 Crisis Management Centre today decided to open essential shops and businesses besides pharmacies from 5:00am to 12:00noon. A meeting of the centre took the decision in view of the rising COVID-19 cases in the district. Lamjung CDO Krishna Prasad Adh Read More...

Province 2

Quarantine facilities emptying in Province 2

JANAKPUR, JULY 4 The number of people staying in quarantine centres has been decreasing. As of last Thursday, the number of people quarantined in eight districts of Province 2 has gone down to 3,770. Two weeks ago, the number of people staying in 455 quarantines facilities of the province w Read More...

Dhankuta map

Opening of new park in Dhankuta delayed due to dispute

DHANKUTA, JULY 4 Even after the completion of construction work of Banjhakri Park months before the deadline, its scheduled inauguration couldn’t take place yesterday due to a dispute between the provincial and local government over the right to inaugurate the park in Dhankuta’s Mahalaxmi Mun Read More...

Private school teachers hit streets demanding salary of lockdown period

Many teachers don’t voice their concerns fearing action from school administration ITAHARI, JULY 4 Private schools’ teachers of Sunsari district have hit the streets to press for payment of their long due salaries. Organised under the banner of Institutional School Teachers’ Union, Suns Read More...

Benchmark index surges 4.54 per cent in volatile trading

KATHMANDU, JULY 4 The Nepal Stock Exchange (Nepse) reopened fully for the first time after the lockdown was imposed on June 29 and in volatile trading till July 2, the benchmark index surged by 4.54 per cent or 54.53 points. After the trading in the sole secondary market was suspended followin Read More...