An interview with Simon Perkins, Managing Director of Ncell Nepal
Himal Khabarpatrika, 15-21 May
Himal Khabarpatrika: What is the row over Ncell’s Capital Gains Tax all about?
Simon Perkins: Ncell’s ownership transfer was the biggest ever transaction in Nepal, and it was natural for the deal to draw everyone’s attention. While we were in a dialogue with the Large Tax Payers’ Office over the issue, the dissemination of one-sided news and views created confusion.
So what is the truth?
The transaction between Axiata and TeliaSonera (now known as Telia Company) involved the sale and purchase of 100% of Reynold Holdings shares, and did not involve Ncell shares. The only transaction that involved Ncell shares was the sale of the 20% of Ncell by the previous local shareholder, Niraj, to Sunivera, for which the 15% advance tax was duly collected and deposited by Ncell. CGT, if applicable, is the full responsibility of the seller, Telia Sonera.
Since Ncell was not a party to the transaction involving the sale of Reynold Holdings shares, it does not have any information relating to the proceeds and acquisition and investment cost of TeliaSonera. However, Ncell, in all of its correspondences on this matter, has stated its intention to work with the LTPO to find an amicable solution with the seller, TeliaSonera. Despite not being a party to the transaction, we have agreed to perform the calculation and deposit the amount based on our calculation.
What next after your payment of Rs 9.96 billion?
Ncell has followed the directive of the LTPO to calculate and deposit 15% of the gains based on information sourced by Ncell through public domain. We fully stand by our calculation and the source of the information on which the calculation was based, and we have fulfilled the LTPO requirement.
But 15% of Rs 136.40 is still
Rs 20.46 billion. Why such a huge discrepancy?
The amount we deposited at the LTPO was calculated on the basis of information from the Norwegian Business Registrar Office. We fully stand by our calculation and source of information.
Ncell seemed hesitant to pay the tax at first, why?
Firstly, it is important to note that TeliaSonera sold 100% of its ownership in Reynold Holdings. Reynold owns 80% of Ncell, and Ncell was never a party to the transaction nor has it made or received any payment in relation to the transaction, so it does not have in its possession any information relating to the transaction neither does it have any information relating to the acquisition or investment cost of TeliaSonera in Reynold Holdings.
The extension request was mainly to work with the LTPO to try and obtain the relevant information from TeliaSonera to perform the calculation as directed by the LTPO. However, since the extension was not accorded by the LTPO, Ncell is still closely working with it and was able to perform the calculation based on information obtained from public domain, and made the deposit payment as directed by LTPO within the stipulated timeframe.
Why didn’t Ncell declare its taxes then?
As I said, the only transaction involving the sale of Ncell shares was for the 20% ownership of Ncell, between Niraj as the seller, and Sunivera as the Buyer. Under this transaction, Ncell has duly complied with the obligation to collect and deposit the 15% gain pursuant to the tax provision of Nepal within the permissible timeframe.
Why did you meet the Chief of the Commission for the Investigation of Abuse of Authority?
The meeting is unrelated to any of the events and it is just a courtesy visit to the regulatory authorities of Nepal.
We have heard that some Nepalis had demanded a stake in Ncell when Axiata was taking over from TeliaSonera.
Again, the sale by TeliaSonera involve the sale of Reynold shares. The events you described above was related to the transaction involving the sale of 20% of Ncell between Niraj and Sunivera Capital. We have heard about the interests from other local individuals and entities for the 20% shares and it is common to have such interest given Ncell’s superior performance to date.
What do you have to say about the No Tax No Ncell campaign on social media?
This campaign is unfair as it is directed against Ncell, which has not received or made any payments in relation to the transaction involving the Reynold shares.
TeliaSonera’s logo is still used with Ncell, when are you planning to rebrand?
We will do it soon.