Use of additional spectrum

Recover dues from Ncell first, PAC tells govt

Published On: February 3, 2020 11:19 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Feb 3:  The parliamentary Public Accounts Committee (PAC) on Sunday directed the government to recover long-standing capital gains tax (CGT) from Ncell before authorizing the private company to use additional frequency.

The meeting also asked the Nepal Telecommunication Authority (NTA) to take the frequency spectrum, which has been put on hold for past one and half years, to a logical conclusion at the earliest.

Roj Nath Pandey, secretary of the parliamentary committee, told Republica that the house panel issued the direction to the Ministry of Finance, Ministry of Communication and Information Technology, and the NTA to take the move to the effect. “Mainly expressing its concern over the revenue loss that the government incurs due to the delay, the parliamentary committee has come up with the move,” said Pandey.

Earlier on December 19, the NTA, through frequency auction, had selected Ncell to use residual spectrum in 1800 MHz band on condition that it first settles outstanding capital gains tax (CGT) dues with the government. 

Frequency spectrum is one of the important resources in the telecommunication sector without which operators cannot start wireless mobile service. The company with higher frequency spectrum can enhance the speed of 4G services at lower cost while helping to expand its coverage.

After being selected to use residual frequency, Ncell had submitted Rs 4.5 billion at the Large Taxpayers' Office (LTO) out of the total tax dues of Rs 22.60 billion including penalty for the delayed payment. The private GSM operator has been requesting that it be allowed to settle the remaining amount in equated installments. 

In the controversial tax issue, the Supreme Court last November asked the private telecommunication operator to pay Rs 21.10 billion in CGT. Last April, the LTO had asked the operator to pay CGT of Rs 39.06 billion, following which Ncell had moved the apex court seeking annulment of the decision taken by taxmen. The private company, however, is yet to clear the amount.

In the parliamentary committee meeting, the lawmakers expressed concern over selection of Ncell in particular for use of frequency spectrum despite the company's failure to abide by the existing law. 

The government is yet to recover Rs 1.61 billion from the United Telecom Limited, Rs 2.32 billion from SmartCell and Rs 820 million from Nepal Satellite Telecom, according to the PAC. 

However, the NTA gave Ncell the go-ahead despite the company having large amount of dues that it owes to the government. Last week, the PAC, through the Ministry of Communication and Information Technology, asked the NTA to provide details of the frequency auction. The parliamentary committee has termed Ncell ineligible to use the frequency spectrum until it clear all the tax dues.

Initially, the NTA had also incorporated the condition of tax clearance as a minimum requirement for telecom firms to participate in the frequency auction. However, the regulatory body later removed the clause, paving the way for Ncell in particular to participate in the auction.

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