Former administrators and civil society members have started to mount pressure on the government to levy capital gain tax on the planned ownership transfer of Ncell.

In December 2015, in the biggest acquisition deal in Nepali history, Malaysia-based telecom firm Axiata had agreed to buy a majority stake in Ncell from Sweden’s TeliaSonera. However, government authorities are still not sure whether to impose capital gain tax as it is an offshore deal.

A team led by former Chief Secretary Lilamani Poudel and represented by former administrators, professors, consumer rights groups and some political leaders organised an interaction here on Sunday to pressure the government not to waive capital gain tax on the Ncell deal.

At the programme, former Chief Secretary Bimal Koirala said the Income Tax Act has made a clear provision that the tax authority can impose tax on such transactions. “But surprisingly, rumours are being spread that imposing tax on the Ncell deal would discourage foreign investment,” he said.

The deal valued at Rs140 billion ($1.4 billion) will give Axiata an 80 percent stake in Ncell.

As per the agreement initialled between the two companies, TeliaSonera is selling its 60.4 percent stake in Ncell to Axiata at around $1.030 billion. The Malaysian company will also buy 19.6 percent stake of Kazakhstan’s Visor Group in Ncell.

If the deal is taxed, the government can receive up to Rs33 billion in revenue.

However, Inland Revenue Department (IRD) Director General Chudamani Sharma has said the tax authority has been studying the matter, claiming tax laws of Nepal are not clear about whether offshore transactions can be taxed. Senior government officials have also been lobbying for waiving of the tax on the Ncell deal.

Former Chief Secretary Poudel, who led the campaign, said Nepal would be heaven for financial criminals if the Ncell deal is not taxed. “It will promote the tendency of piling up black money,” he said.

While the government authorities have been expressing confusion about whether to tax the transfer of 80 percent stake held by foreign companies, the value of 20 percent stake held by locals has been maintained very low compared to that of the foreign stake.

The price for the 80 percent stake held by the foreign firms has been maintained $1.4 billion, while the 20 percent stake held by Nepalis has been valued at $48 million.

In a recent Parliamentary Finance Committee meeting, lawmakers had expressed suspicion that the price for the 80 percent foreign stake was maintained higher assuming that no tax would be levied on that transaction, and the price for the domestically-held shares—on which the tax is applicable—was maintained lower to evade tax.

At Sunday’s interaction, Chartered Accountant Prakash Poudel presented a paper on Ncell’s current share structure and tax planning.

“It cannot be said there is no intention of evading tax as investment in Ncell has been made through a company registered in a tax heaven,” he said.