Should Ncell (Pvt) Ltd. pay the capital gains tax on the sale of its ownership by its earlier owner Telia Company to present owner Axiata? The answer differs depending on whom you ask. Obviously, the company says it need not. And interestingly, the tax authorities too are implicitly saying that it need not. Otherwise, they would have already made the tax assessment and notified the company to pay it. Since the buyer and sellers of the ownership had publicly announced of their deal more than a year ago, the Nepali tax authorities have done nothing about it. This proves that the Nepali tax authorities think Ncell cannot be asked to pay this tax. The Nepal Telecommunication Authority which regulates the business that Ncell is in says it has not received any communication from the tax authorities in this case.
Meanwhile, the company has already paid an amount that it says was withheld in the company for the transfer of partial ownership from one Nepali party to another Nepali party.
But there is a strong lobby which is arguing that Ncell must be made to pay this tax for the capital gain that its earlier owner Telia made by selling its ownership to Axiata. And this group is comprised of some politicians, social activists and former bureaucrats, who (it is alleged and looks plausible too) are being mobilized by some businessmen that were trying to get the Telia ownership in Ncell transferred to their name.
It is queer. A question of whether to levy tax on someone should be decided by those who are tasked to do so. That is the tax authority, not the civil movement. Street mobs cannot be allowed to force someone to pay tax. If there is any such movement, it should focus on pressing the authorities to do their duty, not on forcing the company to pay the tax.
What if the authorities don’t collect taxes that they should? Obviously, actions should be initiated against such authorities individually. Then why no action is initiated against those tax officers even after the lapse of such a long time stretching over a year? This long delay must have a reason and that can be explained by the tax authorities themselves. Since the tax authorities are not moving ahead with the tax assessment for so long despite such a public pressure, it can be deduced that they are strongly convinced that the law books don’t allow them to impose any tax on Ncell. Why nobody, even the parliamentary Public Accounts Committee, is asking these tax officers about their opinion?
Another interesting side of this story is that authorities higher than the tax officers are themselves against making Ncell pay this tax. Though they are publicly saying nothing more than that taxes will be levied according to the law of the land, they are not heard saying when they asked the experts for their formal opinion and what such opinion was. This situation of long indecision has to come to an end soon. Pressing the company to pay the tax by withholding permission to expand its services is tantamount to extortion. This not only denies the Ncell consumers the opportunity to enjoy the new services that the company wants to introduce, it also sends bad signals about the business environment in Nepal.