Two days before the deadline set by Large Taxpayers Office for Ncell to clear its dues expires, the mobile company says it has still not taken a decision on the amount determined by the tax office.

In line with the order of the Supreme Court to collect capital gains tax from the private sector mobile company and its parent firm, Axiata, the Large Taxpayers Office on April 16 determined their capital gains tax liability at Rs39.06 billion, and asked them to pay the amount in seven days.

“We will take a decision within the deadline set by the Large Taxpayers Office,” an official at Ncell who asked to remain anonymous told the Post. The deadline is on Tuesday.

Since the order on the capital gains tax was passed by a full bench of the top court, officials and legal experts say there is no room for Ncell and Axiata to appeal to any other court of law.

However, the court order does not prevent Ncell from seeking an administrative review on the amount determined by the tax authorities.

“The companies cannot appeal in any other court,” said Yagya Prasad Dhungel, spokesperson for the Inland Revenue Department. “But it does have one option: seeking an administrative review of tax, fines and interest levied by the Large Taxpayers’ Office.” For that,  For this, Ncell will have to make a formal request to the Revenue Tribunal and the director general of the Inland Revenue Department.

As per the law, taxpayers can seek an administrative review in three areas: assessment of tax payable by any person or firm, fees levied and the interest determined by the tax authority. In order to apply for the administrative review to the director general, one has to pay one-third of the disputed amount while also making full payment of the tax that is not disputable.

If taxpayers—individuals or firms—are not satisfied with the director general’s decision, they can apply to the Revenue Tribunal, according to the Income Tax Act.

A day after the Supreme Court released the full text of its verdict, Ncell on April 11 stated that the mobile company and its parent firm were reviewing the decision of the court.

“Pending review of the decision by the Supreme Court, at this time, Axiata reiterates that it and Ncell have dutifully and responsibly complied with all regulatory and legal requirements in relation to the transactions and acknowledges the order without prejudice to our legal remedies,” Ncell said in a public notice issued in response to the court order.

Legal experts say Ncell and Axita cannot make a further appeal in any other court within Nepal but they can consider going to international bodies, seeking legal remedy.

“The court has said the Double Taxation Avoidance Agreement signed between Nepal and Norway is not attracted in this case,” a corporate lawyer told the Post on condition of anonymity.

TeliaSonera, the previous owner of Ncell, was registered in Norway and had maintained controlling stakes in Ncell through Reynolds Holdings Limited registered in Saint Kitts and Nevis, a tax haven in the Caribbean.

“One thing they probably can do is to file a case at the International Centre for Settlement of Investment Dispute, arguing that Nepal didn’t protect the investment from the United Kingdom as per the bilateral agreement on promotion and protection of investments signed on March 1993,” the lawyer told the Post.

Although the current foreign investor in Nepal is a Malaysia-based company, it invested here through a company registered in the United Kingdom called Axiata UK.

The International Centre for Settlement of Investment Dispute was founded in 1966, based on a multilateral treaty formulated by the executive directors of the World Bank to further its objective of promoting international investment.

Ncell’s capital gains tax issue had been dragging on for years after TeliaSonera sold the telecom service operator to Axiata in 2016, the biggest acquisition deal in Nepal’s corporate sector.

But by the time tax authority initiated the process to collect the capital gains tax in the Ncell buyout deal, TeliaSonera had exited Nepal. But following the public interest litigation filed by a group of civil society members, the Supreme Court in February said the responsibility to pay the capital gains tax lay on Ncell and Axiata—and not on TeliaSonera. While releasing the full text of the February order on April 10, the top court asked the authorities to recoup the dues from Ncell and Axiata within three months.

The Large Taxpayers Office determined the total capital gains tax for Ncell and Axiata at Rs62.63 billion. But since the two companies had already paid Rs23.57 billion in two instalments in 2016 and 2017—Rs21.54 billion as capital gains tax and Rs2.02 billion as fine—and the company’s tax liability now stands at Rs39.06 billion.

Although the court is largely believed to have put an end to a long-drawn-out debate over whether the seller or buyer should pay the capital gains tax, some legal experts say the order has raised more questions than given one concrete answer.

“The [Ncell tax] case—and the court order—has reinforced the need for a clear law,” said Semanta Dahal, an advocate, “particularly when it comes to offshore investment in Nepal.”