Ncell moves Supreme Court against tax determination

Published On: April 22, 2019 04:50 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, April 22: The private telecom company Ncell has filed a writ petition at the Supreme Court on Tuesday arguing that the tax amount determined by the Large Taxpayers’ Office (LTO) earlier last week was not in accordance with the existing law.

The Ncell moved the apex court a day before the expiry of the seven-day deadline to pay its capital gains tax. In its writ petition, the company claimed that the LTO has erroneously fixed its tax liability at Rs 39.06 billion. The Ncell has stated that the capital gains tax stands only at Rs 14 billion.

Earlier on April 17, the LTO had assessed that the tax amount of Ncell buyout and asking the company to pay the remaining capital gains tax (CGT) amounting to Rs 39.06 billion, which includes interest and fine by April 23.

LTO made its final assessment of the CGT on the sale of the company that took place three years ago after the Supreme Court issued a verdict on the matter two weeks ago. The total payable has been fixed at Rs 62.63 billion including fines and interest. The total CGT has been fixed at Rs 35.91 billion and fine and interest at Rs 18.33 billion and Rs 8.39 billion respectively. The company has already paid the government a total of Rs 23.57 billion in two instalments.

Swedish Company TeliaSonera had sold its 80 percent stake to the Malaysian Company Axiata for Rs 143 billion in April 2016. LTO's chief Dhaniram Sharma said that they reassessed the tax as per the SC verdict which had told the tax offices to reassess the tax within three months.

Following the SC verdict, LTO had to change its previous assessment in which it had asked TeliaSonera [now known as Telia Company], the seller, to pay the tax. The seller has already left the country.

Stating that the court enjoys the extraordinary authority to 'settle the dispute' and 'provide necessary remedy' to resolve the dispute, the court's full-text verdict had concluded that the tax offices concerned didn't rightly claim taxes from the telecommunications company while the company's shares were sold to Axiata. The court stated that Section 57 (1) of the Income Tax Act-2058 makes Ncell and Axiata responsible for paying the CGT and not TeliaSonera. According to a press statement issued by LTO on Tuesday, Ncell Pvt Ltd has also received the LTO letter on Tuesday.

The controversy came to surface after the government, particularly the Inland Revenue Department (IRD) and its entity LTO, did not assess the tax and also issued conflicting statements on the matter.

First, the IRD remained silent on who was responsible for paying the tax on the profit earned from the business and services generated from Nepal but after TeliaSonera, the Swedish company, left Nepal, top government officials including the then Prime Minister Pushpa Kamal Dahal stated that the seller should pay the tax. This meant Ncell wasn't responsible.


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