Print Edition - 2016-05-14 | MONEY
PAC to probe tax issue in sale of Ncell shares
The House panel said on Friday that it was preparing to form a high-level technical committee to look into the matter
May 14, 2016-The parliamentary Public Accounts Committee (PAC) has decided to open a formal investigation into the issue of capital gains tax in the recent sale of Ncell shares. The House panel said Friday that it was preparing to form a high-level technical probe committee to look into the matter.
“We will proceed after receiving a clear answer from the Finance Ministry regarding their stance on the Ncell deal,” said Janardan Sharma, chairman of the committee. “During our previous meeting, we had told the ministry to present a written clarification regarding the capital gains tax issue.” The PAC is yet to receive an explanation from the ministry.Lawmakers also criticized the Finance Ministry for not providing a clarification of the statement of CEO Simon Perkins of Ncell, the country’s largest private cell phone service. During a recent press conference, Perkins had said that government officials had informed Ncell that the deal was not subject to capital gains tax.
“Ncell organized a press meet to say that they thought they were not liable to pay tax after consultations with Finance Minister Bishnu Poudel and officials of the Office of the Prime Minister,” said lawmaker Dhan Raj Gurung. “We must summon those officials for a discussion.” He added that Ncell should pay tax or it should be shut down. The parliamentarian also expressed doubts if previous ownership transfers of Ncell had come under the tax bracket. “Before the April 12 ownership transfer of Ncell, we found that there had been transfers of ownership on multiple occasions,” lawmaker Minendra Rijal said at the PAC’s Friday’s meeting. “This gives us enough room to suspect wrongdoing in those deals, and we should take the help of experts to probe the matter.” Lawmakers were also sceptical about the amount declared and paid by Ncell to the Large Taxpayers’ Office (LTO) as tax deduction at source (TDS). “The entire deal should be investigated by experts to figure out if the amount declared by Ncell is correct or not,” said lawmaker Dor Prasad Upadhyay.
On May 8, Ncell paid Rs9.96 billion as TDS claiming the amount to be 15 percent of the gains of TeliaSonera arising from the sale of shares of offshore company Reynolds Holding, which owns 80 percent of Ncell, to Axiata.
The LTO is also yet to determine if the amount declared by Ncell is correct, and officials have said that an investigation will be carried out immediately.
Last April, Malaysia’s Axiata bought Reynolds Holding, which held a majority stake in Ncell, from Swedish-Finnish company TeliaSonera at an enterprise value of $1.03 billion in a record deal.
Reynolds Holding was TeliaSonera’s wholly-owned subsidiary, registered at Saint Kitts and Nevis, a tax haven. The tax authorities moved to tax the transaction only after TeliaSonera had left Nepal.
The LTO initially wrote to TeliaSonera asking it to submit tax details, but the company argued that the deal was not taxable in Nepal. Subsequently, the LTO asked Ncell to file a tax return by May 7. But the deadline was automatically postponed to Sunday as it fell on Saturday, a public holiday.
Published: 14-05-2016 08:07