IRD still undecided on whether to tax Ncell ownership transfer

KATHMANDU, March 1: Government agencies, including Inland Revenue Department (IRD), are still undecided on whether to levy taxes on Teliasonera's sale of Ncell to Axiata.

Officials of IRD have told the Development Committee of parliament on Monday that the issue is under study.

It has already been two months since Teliasonera made the announcement. But IRD, the agency to determine tax amounts, has not been able to decide whether capital gains tax can be levied on the transaction.


Teliasonera is offloading 60 percent of its shares in Ncell to Malaysian firm Axiata for about US$ 1.1 billion. Similarly, its local partner Niraj Govind Shrestha is selling his 20 percent of shares in Ncell to Sunivera Ventures - a Singapore registered company owned by Bhavana Singh Shrestha. Interestingly, Sunivera Ventures was selected by Axiata itself. The total transaction is believed to be worth $1.4 billion.

The parliamentary committee had, on January 26, sought opinion from IRD, Ministry of Information and Communications, Office of Company Registrar, and Department of Industry, among others, on the transaction.

Speaking at a discussion on the issue in the meeting of Development Committee on Monday, lawmakers took serious objection on the indecisiveness of IRD and other state agencies. Lawmaker Jivan Bahadur Shahi said bureaucrats and high-level authorities were deliberately delaying decision on the issue. Similarly, another lawmaker Ganesh Kumar Pahadi termed the indecisiveness as a sheer negligence of the government authorities.

Responding to Axiata's application seeking prior decision on taxation issues, IRD could only say that the issue is under study and no decision has been taken yet, an IRD official told Development Committee meeting on Monday.

IRD has said that any transactions made in lower prices, with an intention to evade taxes, can be re-examined to recover taxes later on as well. However, IRD has made it clear that they can levy capital gains tax only on transactions made in the country.

Similarly, MoIC has told the Development Committee that it was studying the issue.

Meanwhile, a high-level committee has been formed to study the issues of license fee for telecom companies, regulating such companies, cross holding in telecom companies, frequency management, and license migration policies, among others. Nepal Telecommunications Authority (NTA) has also appointed a consultant for the purpose.

The committee has directed the government to immediately clarify legal issues, stating that government agencies cannot remain indecisive for such a long time. "Indecisiveness raises question on efficiency of concerned agencies. The concerned agencies should clearly say whether or there is any attempt to evade tax. It should take decision in such a way that it doesn't affect flow of foreign direct investment in the country," reads the direction issued to the Ministry of Finance and IRD, among other agencies. However, the committee has not given any specific deadline.

Rabindra Adhikari, chairman of Development Committee, said the committee was looking at the issue closely.

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