The Inland Revenue Department (IRD) has initiated an investigation into Axiata Group's exit from Ncell, amid suspicion of potential tax evasion. The controversy surrounds Axiata's sale of 80 percent stakes in Ncell to Spectrlite UK for a seemingly undervalued amount of US$ 50 million (Rs 6.5 billion). This development demands urgent attention from government bodies concerned, necessitating a meticulous investigation to ensure transparency and accountability in business transactions. Axiata Group Berhad's acquisition of controlling stakes in Ncell in 2016, at a whopping US$ 1.365 billion (Rs 143 billion), marked a significant milestone. However, the recent exit has raised eyebrows, with concerns centering on the low valuation of the sold-out shares. The IRD's decision to delve into this matter is a commendable step toward upholding fiscal integrity within the country.
One critical aspect that demands immediate clarification is the lack of formal communication from Axiata Group to the tax offices regarding its exit from the Nepali market. This lack of transparency is not only a breach of standard business practices but also raises questions about the company's commitment to ethical financial conduct. Dirgha Raj Mainali, the director general of the IRD, highlighted the initiation of a due diligence audit and fair valuation of shares related to Axiata's departure from Ncell. Axiata's unilateral decision to exit Nepal's telecommunications sector without informing government authorities, including the Nepal Telecommunications Authority (NTA), adds another layer of concern. The NTA, in response, has rightfully called on Axiata to follow legal procedures and seek prior approval when selling or transferring shares. Such regulatory oversights cannot be overlooked, as they undermine the principles of fair play and adherence to established norms.
The company's announcement attributing its exit to the "current conditions of unfair taxation and regulatory uncertainties for its longer sustainability" has sparked further debate. Independent lawmaker of the federal parliament Amresh Kumar Singh, in a press meet, went on record to express suspicions of tax evasion through this controversial deal. Singh's concerns are not unfounded, especially given the vast difference between Axiata's annual revenue of Rs 40 billion and the meager Rs 6 billion it received from the stake sale. The call for a comprehensive investigation by lawmaker Singh resonates with the need for accountability and transparency in corporate dealings. It is imperative that the government bodies concerned conduct an exhaustive inquiry into the financial intricacies of this deal. The discrepancy between the company's earnings and the value of the shares sold raises valid questions about the potential exploitation of loopholes in the tax system. As the government bodies embark on this investigation, it is equally crucial for them to identify and address any existing loopholes in the system that may have facilitated such questionable transactions. Strengthening regulatory frameworks and enhancing collaboration between government agencies can serve as preventive measures against similar financial irregularities in the future. The government, through its relevant bodies, must ensure that the due diligence audit reveals the true nature of the transaction and that any potential tax evasion is dealt with decisively.