Axiata's Nepal unit in unusual tax move

Axiata entered the Nepal market with its local partner, Sunivera Capital Ventures Pte Ltd, holding 20% direct local shareholding in Ncell, as required under local law.

KUALA LUMPUR: In unusual move to resolve the capital gains tax in Nepal following Axiata Group Bhd’s purchase of an 80% in Ncell Pvt Ltd, Ncell has stepped forward to deposit the advance tax on behalf of its former owners

Ncell, which is Nepal’s first private mobile operator, said yesterday it had responded to Nepal’s Large Tax Payers Office over the gains which TeliaSonera Norway Nepal Holdings AS (Telia Norway) had made when it sold its shares in Reynolds Holdings Ltd, which owned the stake in Ncell.

“Whilst making the deposit of the advance tax in keeping with the company’s commitment to working in close partnership with the government and people of Nepal, Ncell reiterated that the transaction involved the sale of Reynolds shares by Telia Norway.

“Ncell had not been involved in the transaction at all, neither has it made any payment or received any payment arising from the transaction,” Ncell said.

Ncell emphasised that had decided to extend its fullest cooperation to the Nepali Government to reach a resolution of prevailing issues with respect to the levy of capital gains tax.

“Notwithstanding the fact that the computation and declaration of capital gains tax if any is the responsibility of the seller of shares, the company had proceeded to place a deposit of advance tax on behalf of the previous owners of Reynolds Holdings,” it said.

Recall that in mid-April, Axiata completed the acquisition from TeliaSonera UTA Holdings B.V. and SEA Telecom Investments B.V. of Reynolds Holdings.

The acquisition of Reynolds for the purchase price of US$1.365bil plus customary adjustments at closing, effectively secures Axiata an 80% equity interest and controlling stake in Ncell.

Axiata entered the Nepal market with its local partner, Sunivera Capital Ventures Pte Ltd, holding 20% direct local shareholding in Ncell, as required under local law.

Ncell said it is one of the largest taxpayers in Nepal, and has consistently complied with the laws of the country.

The company said it has on all occasions exercised the highest standards of governance and compliance pertaining to the fulfilment of tax obligations.