The private telecommunications company United Telecom (UTL) has been evading taxes by depositing 70 per cent of profits from incoming international calls to its parent companies in India and paying only 30 per cent of its total royalty by claiming it has been in loss all these years. Almost 80 per cent of UTL's shares is owned by three Indian companies MTNL, Telecom Consultants and Tata. The remaining 20 per cent belongs to Nepal Ventures.
Since getting its permit in 2002, UTL has evaded Rs 1.6 billion in taxes. Even though the CIAA and the Public Accounts Committee of the CA had directed the government not to write off UTL's tax payments, the government did not comply.
During Gyanendra's rule, UTL used Indian diplomatic channels to pressurise the government so that it would be exempt from paying taxes worth Rs 189.4 million. An official who took part in the negotiations over the Trade and Transit Treaty between the two countries reveals, "After all negotiations were completed, the Indian party raised the issue of exempting UTL from taxes." Later, on the king's orders, the cabinet decided to write off UTL's royalty payments and the Trade and Transit Treaty was extended until 5 January 2013.
A source at the Nepal Telecommunications Authority (NTA) says UTL is confident the government will once again make an exception because it feels a democratic government must yield to its demands when even an autocratic monarchy obliged. The source adds, "UTL has already received guarantees from politicians as well as the Ministry of Foreign Affairs. The resignation of the chairman of NTA is proof of this deal."
"When we requested the ministry to grant us permission to investigate and the security forces to close down UTL's operations, Minister Raj Kishor Yadav used his influence to stop our work," admits Bhesh Raj Kandel who resigned from the post of NTA chairman last month citing the state's unwarranted interference. "Since all high level officials are in cahoots, UTL will be given the green light to evade taxes once more."