Nepal Court halves Axiata's Ncell capital tax to RM762 mil

Friday 26 Apr 2024

KUALA LUMPUR (Nov 22): The Supreme Court of Nepal has ruled that Axiata Group Bhd’s Nepalese unit Ncell Private Ltd will remain liable for the outstanding capital gains tax (CGT).

However, the outstanding amount was halved to 21.1 billion Nepalese rupees (approximately US$182.69 million or RM762.26 million) compared with the original outstanding amount of NPR 39.06 billion (approximately US$339.63 million or RM1.45 billion).

In a filing with Bursa Malaysia today, Axiata — citing the court’s full written judgement dated Nov 21, 2019 — said the court has stated that the prior tax amount assessed by Large Taxpayers Office (LTPO) is to be reduced to the extent of fees purportedly levied under Section 120(a) of the Nepalese Income Tax Act which were found to be unlawful.

This was following the writ petition against the Nepali tax authorities LTPO and the Inland Revenue Department of Nepal seven months ago (April 22, 2019), demanding Ncell to pay NPR 39.06 billion in allegedly outstanding CGT.

This means that the court has deemed nearly half of the demand was unlawful.

The alleged CGT claim arose from the transaction which Axiata, through its wholly-owned unit Axiata Investments (UK) Ltd, acquired Reynolds Holdings Ltd from TeliaSonera Norway Nepal Holdings AS.

Reynolds is the immediate holding company of Ncell.

The LTPO was supposed to collect the CGT from the seller.

However, since TeliaSonera did not have any presence in the country after the divestment of Ncell, the tax authority shifted the burden to Ncell, the transaction’s buying party.

“As one of Nepal's largest taxpayers, Ncell has contributed more than NPR210 billion in taxes since its inception,” said Axiata.

“Ncell also, both directly and indirectly, supports 93,883 jobs and connects 17 million customers across our networks,” the company said, adding that both Axiata and Ncell remain fully committed to serving their customers in Nepal and will take all available action to avoid any disruption to services and operations in consequence of this dispute.

Shares of Axiata closed six sen or 1.4% higher at RM4.36 today, valuing the company at RM39.95 billion. Over the past year, the counter has gained about 30% from RM3.35.