Print Edition - 2016-04-18 | MONEY
Naya Shakti: Recover tax from TeliaSonera
- ncell’s acquisition by malaysia’s axiata
Warns of launching campaign to boycott Ncell’s services if the company does not pay taxes
Apr 18, 2016-Naya Shakti Nepal has warned they will launch a campaign to boycott Ncell’s telecom services if the latter doesn’t pay the capital gain tax to the government as per the law. The party on Sunday submitted a memorandum to the Large Taxpayers’ Office (LTO), urging it to recover the tax from TeliaSonera, which sold its majority stake in Ncell to Malaysia’s Axiata.
“We came to know that only the local partner in Ncell paid the capital gain tax for 20 percent holding,” said Khimlal Devkota, spokesperson for Naya Shakti Nepal. “If the telecom provider doesn’t pay the tax, we will be forced to start a nation-wide campaign to boycott Ncell’s services.”Rameshwor Prasad Khanal, a leader of Naya Shakti and former Finance Secretary, said they sought to provide political support to the LTO amid concerns about massive political pressure it is facing to exempt the tax. “We thought the LTO must be in tremendous political pressure, so we drew its attention to make them aware as well as supporting them,” said Khanal.
He said the country’s Income Tax Act has a clear provision that the capital gain tax can be levied on offshore transactions. “As TeliaSonera has already exited Nepal, Axiata should collect the applicable tax from the former Ncell owner and deposit it at the LTO. Otherwise, it has to face consequences.”
Despite the completion of Ncell’s acquisition by Axiata from TeliaSonera, tax authorities have not yet concluded whether capital gain tax is imposed on the transaction. With tax authorities not taking decision on the matter, civil society members, including former administrators, have started mounting pressure on the government to tax the transaction.
The acquisition was completed after Axiata acquired TeliaSonera’s wholly-owned subsidiary Reynolds Holding, which held 60.4 percent stake in Ncell, for $1.03 billion. Axiata also bought another 20 percent stake in Ncell form Kazakhstan-based Visor Group for around $400 million. TeliaSonera first announced its planned Ncell divestment in December 2015 which was followed by a nat- ional debate regarding whether capital gains tax should be levied on offshore deals.
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 set $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.
Published: 18-04-2016 09:22