KATHMANDU, Jan 25: Parliament’s Public Accounts Committee (PAC) on Tuesday directed the government to restrict Ncell from introducing its 4G wireless internet service without first clearing the capital gains tax (CGT) on a share transaction worth Rs 143 billion.
The fourth generation wireless service provides faster data speed compared to 3G.
Malaysia-based telecom company Axiata bought Ncell shares worth Rs 143 billion in December 2015 from Swedish company TeliaSonera but Ncell has been dillydallying over clearing the CGT payable on the deal although various entities including parliamentary committees have repeatedly asked it to do so.
PAC, after concluding a series of meetings on Tuesday, asked the Ministry of Information and Communications and Nepal Telecommunications Authority to restrict the company from providing any new service or service expansion until it clears the CGT, said Surendra Aryal, under secretary at PAC.
PAC had discussed the issue with officials of the Ministry of Finance (MoF) and the Inland Revenue Department two weeks ago. During the meeting MoF officials pledged to assess the CGT payable and collect the tax within three months.
This is not the first time PAC has issued directives to the government to collect CGT. Besides issuing directives to MoF to assess the tax and collect it, PAC had also directed the Commission for Investigation of Abuse of Authority back in May to investigate tax officials who have dillydallied over assessment of the CGT amount and its recovery. But the issue remains unresolved even a year after the record size share transfer deal in the country.
Lawmakers during the discussions insisted that giving Ncell 4 G permission without clearance of dues means rewarding a company evading tax.
Speaking at the PAC meeting on Tuesday, lawmaker Ram Hari Khatiwada said the 4G license should not be issued without clearance of the dues. However, he added,“There should be no confusion who (buyer or seller) has to pay the tax on the transaction and we should first ask MoF to determine the tax amount and who (TeliaSonera or Axiata) should pay it.”
He estimates that Ncell should pay about 25 percent of the share transaction amount or Rs 36 billion but it has so far paid only Rs 13 billion.
Nepal Telecom, Ncell’s rival, has already launched a 4G service since January 1. Ncell Managing Director Simon Perkins has publicly argued that the remaining tax is not Ncell’s responsibility but rather that of the seller.