This article first appeared in The Edge Financial Daily on June 6, 2017

KUALA LUMPUR: Ncell Pvt Ltd, an 80%-owned subsidiary of Axiata Group Bhd, said it has paid the remaining 13.6 billion Nepalese rupees (RM560 million) in capital gains tax to the Large Taxpayer Office (LTO) in Nepal on an indirect sale by Swedish-Finnish firm TeliaSonera Norway Nepal Holding AS.

In a filing with Bursa Malaysia yesterday, Ncell said this is despite it not being a party to the transaction and neither Ncell having received nor made any payments in relation to the transaction.

“[However,] the deposit and closure of this matter are part of our commitment to continue serving Nepal,” it added.

With the latest payment, Ncell said it has concluded its tax matters with LTO in relation to the indirect sale by the previous owner, TeliaSonera Norway.

“Based on the total advance deposit placement by Ncell to date, LTO in its confirmation letter to Ncell today (yesterday) conclusively certified and acknowledged that Ncell has fully complied with the direction of depositing advance tax pursuant to Section 95A of the Income Tax Act, 2058 (2002), and the company is now fully cleared in relation to the transaction which had attracted capital gains tax under the act,” it added.

“With this conclusion, Ncell can now focus on proceeding with our investment and service expansion plans, in particular, with regard to 4G roll-outs which will leapfrog Nepal’s digital economy, without any further obstacles,” Ncell managing director Simon Perkins said in a statement.

Ncell said it will continue to invest aggressively in Nepal’s telecommunications infrastructure.

The No 1 mobile operator in Nepal pointed out that it remains one of the largest taxpayers, with over 160 billion Nepalese rupees paid over the last 13 years (from fiscal year 2005/2005 to June 1, 2017).

“Ncell contributes 3.2% of gross domestic product of Nepals; its capital and operational investment in 2016 alone amounted to US$258 million. Through its operations, directly and indirectly, Ncell supports close to 110,000 jobs in Nepal,” it added.

In December 2015, TeliaSonera Norway and SEA Telecom Investments BV sold 80% of Ncell’s stake to Axiata for US$1.37 billion. It was reported that only after TeliaSonera Norway exited Nepal, the tax authority started the initiative to tax the transaction.

Ncell had earlier paid 9.96 billion Nepalese rupees as tax deduction at source, which constituted 15% of the 25% of capital gains tax. In January this year, Perkins was reported as saying that the remaining 10% capital gains tax should be paid by the seller of Ncell, which was TeliaSonera Norway.

LTO had written to TeliaSonera Norway, asking the latter to submit tax details, but the company has been reluctant to pay the tax, arguing the deal is not taxable in Nepal.