PAC summons Dahal to explain Ncell tax issue

- SANJEEV GIRI, Kathmandu

Apr 4, 2017-

The parliamentary Public Accounts Committee (PAC) has directed Prime Minister Pushpa Kamal Dahal to appear before it by April 12 to explain the government’s position on the capital gains tax controversy surrounding Ncell, the largest private telecom operator in the country. 

The letter containing the directive was sent to the Prime Minister’s Office (PMO) on Sunday evening.

The House panel decided on March 17 to summon Dahal after a statement by Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara that the tax issue has been discussed during a recent Cabinet meeting ‘at the insistence of Prime Minister Dahal’. 

“The letter was sent to the PMO after obtaining the prime minister’s consent. We hope to hear from him soon and call him for a meeting,” PAC Chairman Dor Prasad Upadhyay told the Post. The panel has told the PMO to inform it at least two days before the PM intends to appear before PAC.

According to Upadhyay, a number of issues including Dahal’s visit to China delayed the process of asking him to attend the parliamentary hearing. “I have personally spoken to the PM about his presence at the PAC meeting. He is positive about it,” he said. 

A Cabinet meeting on March 8 had reportedly discussed levying capital gains tax on TeliaSonera, Ncell’s parent company which sold its majority stake in the telecom company to Malaysian telecom giant Axiata in 2015. TeliaSonera has already left the country. 

Mahara stated that Ncell had written to the PMO attaching copies of the decisions made by PAC as well as the parliamentary Finance and Development committees requesting clarity on the tax issue. Subsequently, the prime minister had inquired about the subject during a Cabinet meeting. 

A majority of PAC members, following the remark, had questioned the PM’s action and said that it would have an impact on the country’s governance system. As many as 17 PAC members then demanded that the committee summon the PM and ask for clarification on the controversy.

Speaking on a television programme entitled ‘Sidha Kura Pradhanmantri Sanga’ broadcast by the state television channel, PM Dahal said that the government was committed to recovering capital gains tax. 

“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 said. 

He added that the government was cautious about recovering capital gains tax on the mega deal besides ensuring that the issue did not impact the foreign investment climate.  

Axiata 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.

Ever since the deal, there has been confusion regarding the tax issue. Ncell has deposited Rs9.97 billion as 15 percent withholding tax, or tax deductible at source for capital gains. Tax authorities are undecided about the actual amount to be paid by TeliaSonera. 

During a recent PAC meeting, Inland Revenue Department Director General Chudamani Sharma stated that the government had a firm base for recovering tax from the mega deal and that the tax authority would soon come to a position and set the tax to be paid by Ncell.

Published: 04-04-2017 08:00

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