The parent company of Ncell is suspected for evading taxes by keeping low valuation of its sold out shares
KATHMANDU, Dec 4: The Inland Revenue Department (IRD) has started an investigation over Axiata's exit from Ncell on suspicion of possible evasion of taxes by the company.
The issue has come to the limelight after Axiata Group sold its 80 percent of stakes in Ncell for a mere US$ 50 million (Rs 6.5 billion) to Spectrlite UK. The Malaysian telecommunications and digital conglomerate had acquired the controlling stakes in Ncell in 2016 following the purchase of Reynolds Holding for US$ 1.365 billion (Rs 143 billion).
According to an IRD official, the company has not officially informed the tax offices regarding its exit from Nepali market. “We have not received any formal letter from the company. The large taxpayer offices have started minute study in concern with the due diligence audit and fair valuation of the shares regarding Axiata's exit from Ncell,” said Dirgha Raj Mainali, director general of the IRD.
Issuing a statement on Wednesday, Axiata Group Berhad announced to put its assets up for sale with the aim of exiting Ncell. The group showed declining revenue out of Nepal based business and blamed ‘current conditions of unfair taxation and regulatory uncertainties for its longer sustainability’ behind the reason for its stepping back.
The multinational company through its unilateral decision announced an exit from Nepal’s telecommunications sector without duly informing the government authorities concerned. Apart from the tax offices, the group had not informed even Nepal Telecommunications Authority (NTA), the sector’s regulator, regarding its new move.
Sending a letter to Axiata on Friday, the NTA asked the parent company of Ncell, to follow legal procedures. The sector’s regulator said the company needs to take prior approval of the NTA when they sell or transfer shares to other parties.
Independent Member of Parliament Amresh Kumar Singh said the company might have evaded taxes to the government through the controversial deal. Organizing a press meet, Lawmaker Singh demanded the government to thoroughly investigate the issue. “It cannot be entrusted for a fair deal as the company earns annual revenue of Rs 40 billion while it is selling its stake for just Rs 6 billion,” Singh said.