This article first appeared in The Edge Financial Daily on April 11, 2019

KUALA LUMPUR: Axiata Group Bhd confirmed yesterday that the Supreme Court of Nepal (SC) had issued its full written order that tax be collected from its units Ncell Private Ltd and Axiata Investments UK Ltd (Axiata UK), in relation to the Ncell buyout deal.

It said in a statement that the written order was issued on Tuesday, April 9, over the indirect transfer to Axiata UK of an 80% stake in Ncell following the sale of the Ncell stake by Sweden-based TeliaSonera Norway Nepal Holdings AS to Axiata UK. Axiata UK is wholly-owned by Axiata.

Nepalese media outlets reported in early February that Ncell and Axiata have been ordered to pay the capital gains tax, which amounted to 61 billion Nepalese rupees (NPR), and putting an end to the years-long controversy over who should foot the tax bill in the transaction.

“The order states that the Large Taxpayers Office (LTPO) should determine the outstanding tax amount to be paid in relation to the transaction within three months from the date of receipt of the order by the LTPO, and that the responsibility to pay tax lies with Ncell and Axiata, the latter who is not a party to the PIL (public interest litigation),” Axiata said in its statement.

“The SC also indicated that distribution of dividends and any sale of Ncell shares by anyone should not be granted until the tax obligation is satisfied,” it added.

It said it is, together with Ncell, reviewing the SC’s decision. “Pending review of the decision by the SC, at this time, Axiata reiterates that it and Ncell have dutifully and responsibly complied with all relevant regulatory and legal requirements in relation to the transaction and acknowledge the order without prejudice to their remedial rights,” Axiata said.

Axiata also said it has, with Ncell, made significant contributions to the socio-economic development of Nepal. Ncell directly and indirectly supports over 93,800 jobs and connects over 16.3 million customers across the group’s networks, it said.

“We remain committed as long-term investors in the country to further enhance digital connectivity and to improve the lives of all Nepalis. We have an exemplary track record of contributing to the development of Nepal and hope that we can continue to build a sustainable business for Ncell for the benefit of the country.

“As the largest taxpayer, contributing NPR 125.68 billion (US$1.17 billion/about RM4.8 billion) in taxes since fiscal year 2014/2015, we believe that the government of Nepal will be supportive of our commitment and use our investment as a demonstration of the willingness and openness of Nepal to attract further foreign investment,” Axiata added.