Ncell Axiata Capital Gain tax issue

From one end to the other, the telecommunication giant Ncell is doing everything to escape its tax laibility. With the controversy there has been number of stories that has build, the recent one is the involvement of the prime minister and how he is holding the Nepal government staffs from taking action against Ncell for not paying tax. It has surfaced that Ncell has paid a hefty amount to the Party in context of making the settlement before the election.

This case has questioned the current Nepal Government's interest and action mechanism upon why they have not been able to take any action against Ncell. 

In the past When TeliaSonera sold Reynolds Holdings shares in Ncell to Axiata for over $1 billion, Nepal’s Large Tax-payers’ Office had said Reynolds owed the government Rs35 billion in taxes and demanded it pay the amount and fines to a total of Rs61 billion.

Ncell Nepal refused to pay that full amount, and transferred only Rs21 billion capital gains tax. After this, the writ was filed, and the Supreme Court on Wednesday also rejected a case filed by Ncell.

The case became controversial after two foreign investors traded ownership of a Nepal-based telecom company. Since TeliaSonera has already left Nepal, the Court found that the buyer is liable to pay capital gains tax if the seller did not.

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No 4G for Ncell Axiata Group

The controversy of capital gains tax (CGT) of Ncell during its takeover has been a long lasting headache for the Nepal government. With view of that  the lawmakers of Nepal have decided not to  allow 4G services to Ncell in Nepal. It has been confirmed that till  it clears the outstanding capital gains tax (CGT) to the Nepal Government, 4G services will be withheld for Ncell Axiata Group.

Axiata Group acquired Ncell last December 2015 from TeliaSonera and Reynolds for US$1.365 billion . The takeover  drew immense criticism as Ncell did not pay CGT as required by the law which is expected to be NRs 23 billion. The deal effectively secures Axiata an 80 percent equity interest and full control over Ncell.

The Nepal Telecommunications Authority (NTA) rolled out  4G  plan for Ncell in the last week of October last year. The Nepal Telecom (NT) has already started its soft launch of  4G service in Nepal after obtaining the licence from NTA.

Axiata Group is  one of the largest Asian telecommunication companies, Axiata today operates in ten countries, servicing approximately 290 million subscribers. With a diverse portfolio in mobile network operations, communications infrastructure services and digital services, the Group pieces together the best in connectivity, technology and people in its vision of Advancing Asia.

Axiata has controlling stakes in market leading mobile operators in South East Asia and South Asia. Axiata Group of companies operate under the brand name of ‘Celcom’ in Malaysia, ‘XL’ in Indonesia, ‘Dialog’ in Sri Lanka, ‘Robi’ in Bangladesh, ‘Smart’ in Cambodia and 'Ncell' in Nepal. Further to this, the Group also holds strategic interests in ‘Idea’ in India and ‘M1’ in Singapore.

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