Recover the tax money

Published On: April 11, 2019 02:00 AM NPT By: Republica  | @RepublicaNepal

Issuing the full text of its final verdict on the protracted row of Capital Gains Tax (CGT) of Ncell telecommunication company, the Supreme Court has finally resolved the issue. As the dispute was prolonged for years as to whether the Axiata that bought shares of Ncell company from TeliaSonera in 2015 or the seller Axiata should pay the CGT, Nepali leaders, bureaucrats, lawyers as well as experts were unnecessarily divided on this matter. Now the court has ended the dispute and clearly ordered the Axiata and Ncell to pay the due amount of Rs 39 billion and its interests within the next three months. It has asked the government authorities to bar the telecommunication company from selling its shares and distributing bonus, among other transactions, until Axiata and Ncell clear all the dues they owe to the state. In this verdict, the apex court has set a clear precedent on such tax issues that may emerge in future as well. This case has clearly given a message to our leaders, bureaucrats and national as well as international investors that no one should attempt to evade tax by being involved in any dodgy deals and bribery while doing business in Nepal. 

The precedent of this verdict will hopefully encourage investors to be involved in fair, transparent and healthy practices, which is the need of the hour. This row was completely unnecessary as this situation wouldn’t have arisen had the companies involved, concerned officials and the erstwhile ministers done the needful to ensure transparent transaction.  But top political leaders and officials further spoiled the situation, some even openly claiming that the companies in question are not liable to paying taxes. So, those officials must be held responsible for, at first, trying to cause a loss of billions of rupees to the state coffers and then by trying to mislead other officials and activists who were fighting to recover the money. Some former as well as incumbent officials and civil society members, however, have played very important role in establishing that the state coffers mustn’t be deprived of the billions of rupees in taxes. They deserve appreciation. 

Now that the government claims it is focused on promoting investment climate in the country and attracting more foreign investors, the authorities shouldn’t leave any stone unturned with regard to making policy clarity in this connection. Genuine multinational companies who prefer healthy investment practices always seek clarity and consistency on policies regarding investment, taxation, dividend repatriation and exit provisions. The government should formulate and make changes in any provisions, if necessary, in line with this court verdict. Still, those who were trying to mislead the officials in this case may attempt to misinterpret the court verdict at their best and maneuver the process of recovering the tax amount. There is no confusion in the text of the court verdict. There should be no ifs and buts in recovering the money as the apex court in its final verdict has specifically stated how much amount in CGT should be collected and who should pay the money. The government should work right away to recover the tax money from Ncell and Axiata. 

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