Prime Minister Pushpa Kamal Dahal will appear before the parliamentary Public Accounts Committee (PAC) hearing on Sunday, chairman of the committee Dor Prasad Upadhyay told the Post.

Last Sunday, the House panel had written to the Prime Minister’s Office (PMO) asking Dahal to appear before it by April 13 to explain the government’s position on the capital gains tax controversy surrounding Ncell, the largest private telecom operator in the country.

“Prime Minister Dahal invited me to his residence at Baluwatar on Monday evening and asked me to make arrangements for the hearing on Sunday,” said Upadhyay. The prime minister is of the view that the applicable tax should be recovered at the earliest possible, he added.

“I have been talking about it in the open. We need to find out an appropriate way. The PAC meeting, in fact, is an opportunity for me to justify the government’s position,” Upadhyay quoted Dahal as saying.

Speaking on a television programme entitled ‘Sidha Kura Pradhanmantri Sanga’ broadcast by the state television channel recently, PM Dahal said, “The government is clear about recovering capital gains tax. At the same time, we believe that there is a need to make a proper investigation.” 

Dahal added that the government was cautious about recovering capital gains tax on the mega deal and, at the same time, ensuring that the issue did not impact the foreign investment climate.

PAC will now extend a formal invitation to the PMO and then schedule a meeting for 11am on Sunday.

The parliamentary committee had decided to summon Dahal on March 17 following Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara’s statement that the tax issue had been discussed during a Cabinet meeting on March 8 ‘at the insistence of Dahal’.

Mahara told the House panel that the PMO had received a letter from Ncell seeking clarity over capital gains tax. Subsequently, the prime minister had discussed the matter during the Cabinet meeting which many believe to be a move to levy tax on TeliaSonera which has already left the country.

Based on the revelation made by Mahara, as many as 17 PAC members put forward a demand to summon the prime minister arguing that the tendency of taking tax related issues to the Cabinet might weaken the governance system.

TeliaSonera sold its stake in Ncell to Malaysian telecommunications giant Axiata in 2015. The company acquired 60.4 percent of Ncell from TeliaSonera, a telecommunications service provider in the Nordic and Baltic countries, Eurasia and Spain, and another 19.6 percent from SEA Telecom Investments BV, a company owned by Kazakhstan-based Visor.

There has been confusion regarding the tax issue ever since the mega deal was concluded. Ncell has so far deposited Rs9.97 billion as 15 percent withholding tax, or tax deductible at source, for capital gains.

Speaking at a recent parliamentary committee meeting, Chudamani Sharma, director general of the Inland Revenue Department, stated that the office had found a firm basis for recovering tax from the mega deal and that the tax authority would soon come to a position and set the tax amount to be paid by Ncell.

Then prime ministers Girija Prasad Koirala and Madhav Kumar Nepal have also appeared before PAC hearings.