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Private telecom company Ncell has started paying its outstanding capital gains tax (CGT) levied by the government on the company’s buyout deal.
Ncell has made a part-payment of Rs4.5 billion to the tax authority as part of its outstanding capital gain tax liability, the Large Taxpayers’ Office said on Tuesday.
The Supreme Court on November 21 determined the tax to be paid by Ncell at Rs21.1 billion.
On December 6, the Large Taxpayers’ Office determined capital gains tax at Rs 22.44 billion including fines and ordered Ncell to pay up by December 19. After the company missed the deadline, the tax office on December 22 wrote a follow-up letter to Ncell, asking it to clear the dues within 15 days along with a warning to the company that upon its failure to do so, it would be subjected to fines on the top of the outstanding tax.
“Though Ncell has sought the facility of paying the remaining CGT in instalments, we are yet to take any decision on it,” said Jhalakram Adhikari, chief of the Large Taxpayers’ Office.
As per section 110 (A) of the Income Tax Act, the tax officer can provide the facility of paying outstanding tax on an installment basis, if the taxpayer makes a written request for such a facility before the tax office files a case in court against such taxpayer.
“We have asked Ncell to submit the timeline of paying their outstanding taxes on installment basis within the current fiscal year,” said Adhikari.
According to Adhikari, the total tax liability of Ncell reached Rs22.68 billion as of Tuesday, up from Rs 22.44 billion initially determined because of 15 percent fines imposed on the company for the delay.
Before the company paid the first installment of outstanding dues on Tuesday, there was confusion over whether the company would indeed pay the amount after the International Centre for Settlement of Investment Disputes on December 18 issued a provisional order barring Nepal’s tax authority to recover its outstanding dues from the Ncell.
International Centre for Settlement of Investment Disputes is the World Bank’s dispute settlement body on international investment.
Ncell, along with Axiata (UK), which now owns Reynolds Holding, filed an application in April, at the global investment settlement body, claiming that Nepal’s conduct in relation to capital gains tax imposed on the mobile company is against the Bilateral Investment Treaty between Nepal and the United Kingdom.
At that time, Ncell had already paid Rs 23.57 billion to the government, but tax authorities were exerting pressure on the company to settle outstanding tax liability of Rs 39.06 billion immediately.
Thereafter, the company had moved the Supreme Court and the outstanding tax liability was reduced to Rs 22.4 billion.
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