Telecom service provider Ncell has cleared all the capital gain tax on its sale on Sunday.
It has paid Rs 14.33 billion on Friday, according to the Large Taxpayers Office. "We are still in bank. Payment is being made. Ncell has paid Rs 14.33 billion," Chief Tax Administrator at the office Jhalak Ram Adhikari told Setopati.
Swedish-Finnish company TeliaSonera had not paid capital gain tax for sale of its 80% stake in Ncell to Malaysian company Axiata in April 2015.
The Large Taxpayers Office earlier had determined that TeliaSonera had made capital gain of Rs 143.65 billion during the sale.
The extended full bench of Supreme Court (SC) headed by Cholendra Shumsher Rana on February 6, 2019 had ordered that the capital gain tax be recovered from Ncell and Axiata. The full bench including Justices Meera Khadka, Bishwambhar Shrestha, Ananda Mohan Bhattarai and Tanka Moktan hearing a petition filed by Dwarika Nath Dhungel demanding the capital gain tax be recovered from Ncell on February 6 had issued a mandamus ruling that Ncell and Axiata should pay the tax.
The mandamus reasoned that Ncell has to pay capital gain tax to the Nepal government despite TeliaSonera selling the shares to Axiata as its business is based in Nepal.
The Large Taxpayers Office on April 16, 2019 had determined that Ncell must pay Rs 62.63 billion in capital gain tax including interest and late fine, and stated that Ncell need to pay Rs 39.06 billion more.
Ncell, that had already deposited Rs 23.57 billion in two installments, then moved the SC claiming that it should pay only Rs 14.365 billion more. It had pointed that the SC has just ordered to recover capital gain tax, and not interest and late fine. It added that it should pay 25 percent of the capital gain of Rs 143.65 billion during the sale which comes out at Rs 35.91 billion.
A full bench of Justices Tej Bahadur KC, Purushottam Bhandari, Dambar Bahadur Shahi, Sushma Lata Mathema and Manoj Kumar Sharma on August 26, 2019 had ordered that the fine component on the determined amount should not be recovered from Ncell.
The SC had also revoked the writ petition filed by Ncell against the Large Taxpayers Office. "The amount determined by the Large Taxpayers Office on April 16 has been revoked so far as the fee levied on the applicant as per clause 120(a) as it seems to be against the clause since the tax liability on Axiata Ncell was created only after the court imposed the liability of capital gain tax on Axiata Ncell and ruled that it should be recovered from the company. The claims of the applicant on other issues, apart from that, has been revoked," the SC verdict on August 26 stated.
The SC on November 21, 2019 then calculated the revoked late fine component of the capital gain tax determined by the Large Taxpayers Office to be Rs 17,956,713,000, and stated that Ncell should only pay Rs 21,103,971,000 more.
Ncell then paid Rs 4.50 billion on December 31, 2019 and Rs 4.60 billion on March 31. It has cleared all the outstanding capital gain tax including interest with payment of Rs 14.33 billion on Sunday.
Malaysian company Axiata had bought Reynolds Holding, which held a majority stake in Ncell, from the Swedish-Finnish company TeliaSonera in April 2016.
Reynolds Holding was TeliaSonera’s wholly-owned subsidiary, registered at Saint Kitts and Nevis, a tax haven. Though capital gains tax needs to be paid by the company that gains from the deal, TeliaSonera has already exited Nepal.
