KATHMANDU, April 9: The Supreme Court has ordered Ncell and Axiata companies to pay capital gains tax to the government. Until Ncell does so, the Supreme Court has also halted the company’s buyout, the sale of shares and distribution of bonus.
On February 7, the full bench of Chief Justice Cholendra SJB Rana and Justices Meera Khadka, Bishwambar Shrestha, Ananda Mohan Bhattarai and Tanka Moktan had issued a mandamus order in the name of defendants—Ncell and Axiata—to pay the huge tax, which they had avoided paying when Ncell shares changed hands three years ago.
Issuing the full verdict text of the case on Tuesday, the Supreme Court has ordered the defendants to pay the gains tax within three months after “necessary evaluation” by the government.
Malaysian company Axiata had bought Reynolds Holdings, which held a majority share in Ncell, from TeliaSonera for $1.03 billion. Reynolds Holdings had appreciated to over Rs 105 billion in April 2015. It was a wholly-owned subsidiary of TeliaSonera and believed to be registered in the tax haven of Saint Kitts and Nevis.
SC finds Rs 21.10 billion remaining CGT liability for Ncell
The civil society members claimed in their writ petition that taxes had been evaded while transferring the management from TeliaSonera to Axiata.
The apex court, meanwhile, annulled writ petitions filed on behalf of Ncell and Rhynolds Holdings, claiming that they did not have any further liability to pay capital gains tax.
Ncell has already deposited Rs 23.57 billion in two instalments as an applicable tax on the profit generated through the sale of the telecom company. It paid Rs 9.97 billion in May 2016 on the basis of its own calculations. It again paid Rs 13.60 billion on June 4, 2017, bowing to intense pressure and criticism from a cross-section of society.
TeliaSonera, a Swedish-Finnish company, has not paid any capital gains tax on the sale of its 80 percent share in Ncell to Malaysian company Axiata in April 2015. As of June 17, 2017, the due tax amount was Rs. 60.71 billion.
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