NTA ‘may not be able’ to stall issuing Ncell’s licence

- Post Report, Kathmandu
Parliamentarians have been demanding that Ncell be barred from introducing 4G service until it settles its capital gains tax

Jan 18, 2017-The Nepal Telecommu-nications Authority (NTA) has said it may not be able to further stall issuing Ncell’s 4G licence for non-payment of capital gains tax as it has not been formally informed about the telecom company’s tax liabilities.

Parliamentarians have been demanding that Ncell be barred from introducing 4G service until it settles its capital gains tax for capital gained on a sale of shares to Malaysian company Axiata last year. 

“The concerned authorities, including the Ministry of Finance, aren’t sure about the capital gains tax that needs to be levied on Ncell’s buyout deal. I came to know from the media that they have sought three months’ time to determine the tax amount,” NTA Chairman Digambar Jha told the parliamentary Public Accounts Committee (PAC) on Tuesday. 

As a result, the tax authorities have not communicated with the NTA so far on the capital gains tax issue, Jha said.

The NTA, according to Jha, makes sure companies have been complying with its laws and regulations, such as the Telecommunications Act 1997, before allowing them to operate new services.

Ncell has paid income tax for the previous fiscal year, 4 percent royalty, 2 percent to the Rural Telecommunication Development Fund and frequency charge, Jha said.   “Companies that have complied with Telecommunic-ations Act 1997, Telecomm-unication Policy 2004 and other laws cannot be barred from acquiring a permit to operate new services,” Jha added.

Ncell had sought permission to launch 4G service in July from its existing frequency of 1800 MHz. Although the NTA has not awarded a licence, it has asked Ncell for a rollout plan. 

Before seeking the rollout plan, the NTA generally awards a technology neutrality licence which allows telecom companies to provide 4G service using their existing frequency.

Although Ncell is yet to obtain a technology neutrality licence, the NTA’s decision to ask for a rollout plan indicates that preparations are underway to issue a 4G licence to the telecom company, observers said.

Information and Communications Secretary Mahendra Man Gurung told the House panel that the Telecommunications Act and Policy do not require applicants to produce certificates related to payment of capital gains tax to obtain a service licence. 

“As the relevant authorities haven’t said anything about capital gains tax, we cannot say that the company hasn’t complied with our law,” Gurung said. 

Nepali Congress (NC) parliamentarian Mohan Basnet said the government should not “reward a company that hasn’t fulfilled its responsibilities”. PAC members Dhurba Wagle, Tek Bahadur Basnet and Usha Gurung, on the other hand, were of the view that the issue of capital gains tax should not prevent consumers from using upgraded technology and service. 

Ncell, the largest private sector telecom company, was acquired by Axiata, a Malaysian telecom company, last year, in the biggest buyout deal in Nepali history. The Malaysian company acquired an 80 percent stake in Ncell for Rs140 billion ($1.4 billion). 

Axiata bought 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. But capital gains tax of around Rs23 billion is yet to be collected from the deal.

On Sunday, PAC directed the Ministry of Finance to recover capital gains tax from the Ncell buyout deal within three months by determining the applicable tax amount.

Published: 18-01-2017 09:03

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