The Large Taxpayer Office has issued a 15-day ultimatum to telecom company TeliaSonera, that left Nepal selling Ncell to Axiata, to pay capital gain tax for the gains it made during the sale in April 2015.
The office issuing a public notice in the name of TeliaSonera's head office in Sweden has reminded that the deadline given to the company to pay Rs 65.40 billion including capital gain tax, interest and fines expired on January 2, and instructed it to pay the amount within 15 days. The office has said it had written to TeliaSonera to pay the capital gain tax even on June 30, 2017 and stated that the company has not paid the amount despite receiving the letter.
The notice warns that it will be forced to recover the tax by taking all or any of the procedures prescribed by section 104-111 of the Income Tax Act 2002 if the company fails to pay the amount within 15 days.
Malaysian company Axiata had bought Reynolds Holding, which held a majority stake in Ncell, from the Swedish-Finnish company TeliaSonera for $1.03 billion (over Rs105 billion) in April 2015. Reynolds Holding was TeliaSonera’s wholly-owned subsidiary, registered at Saint Kitts and Nevis, a tax haven.
The Income Tax Act of Nepal requires foreign investors to pay 25 percent in capital gains tax. Of this amount, 15 percent is left at the company that was sold while the remaining 10 percent should be paid by the seller. This means Ncell has to pay 15 percent of the capital gains tax while the remaining 10 percent should be paid by Telia.
Though capital gains needs to be paid by the company that gains from the deal, TeliaSonera has already exited Nepal.
Ncell has already deposited Rs 23.57 billion in two installments as tax applicable on the profit generated through sale of the telecom company. It had first paid Rs 9.97 billion in May, 2016 in tax return based on its own calculations. It had then paid Rs 13.60 billion on June 4, 2017 bowing to intense pressure and criticisms from a cross section of the society. .
