Offshore share transfer deal an attempt to evade tax: Former PM Bhattarai

Published On: March 13, 2017 09:41 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, March 13: Former Prime Minister and Coordinator of Naya Shakti Party Nepal, Baburam Bhattarai, has said that the offshore deal to transfer 80 percent of the shares in Ncell was an attempt to evade taxes.

“Attempts have been made to evade tax by not registering share transfer information at the Office of the Company Registrar,” Bhattarai said in a statement issued on Sunday. Bhattarai has also accused UCPN (Maoist) and Nepali Congress of helping in tax evasion.

Bhattarai, who was silent on the issue being discussed widely by parliamentary committees and media for about a year, has protested the recent cabinet decision regarding the share transfer deal, saying that a serious crime has been committed by forging consensus at the high-level.

“Direct cabinet decision on recovering tax is a height of corruption and shamelessness,” Bhattarai said, condemning the cabinet decision on the issue. He also argued that tax assessment is the task of tax men, not the cabinet.

The cabinet on Wednesday made a surprise decision of recovering the CGT from Ncell share transaction worth US$ 1.03 billion from seller company TeliaSonera which has already left the country. It has directed the Ministry of Finance to recover CGT as per the decision of the Public Accounts Committee (PAC) of May 29 and Finance Committee of June 3 from the seller of Ncell.

The decision means Swedish communication firm, TeliaSonera AB, has to pay CGT to the Nepal government.

Malaysian telecom giant Axiata had bought Reynolds Holding, which held a majority stake in Ncell, from TeliaSonera at around US$ 1.03 billion in April last year. Reynolds Holding was TeliaSonera’s wholly-owned subsidiary, registered at Saint Kitts and Nevis -- a tax haven.

TeliaSonera AB sold its entire stakes in Ncell as part of its strategy to exit Asian and former Soviet markets to focus on Europe and its home -- the Nordic region. The Swedish firm had sold a 60 percent stake in Ncell and also dissolved its interest in an additional 20 percent stake owned by local partner in December 2015. Ncell officially became a part of Axiata Group Bhd on April 12, 2016.

However, the Nepali taxmen started an initiative to tax the transaction only after TeliaSonera exited Nepal.

The largest transaction in Nepali corporate history has been in news also due to some of the responsible government officials, including director general of Inland Revenue Department Chudamani Sharma, who have been saying that TeliaSonera does not need to pay CGT in Nepal. Likewise, TeliaSonera has also been claiming that there is no need to pay CGT in Nepal since the transaction had taken place outside the country.

However, the house committees had been regularly directing the Large Taxpayers Office to fix the CGT the TeliaSonera owes to the Nepal government.

Bhattarai has noted that even a poor farmer has to pay CGT on the profits made by selling his farmland purchased from hard-earned money. “Therefore, it’s a serious policy corruption,” he argued.


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