Axiata Confirms Receipt of Assessment Order of Nepal’s Large Taxpayers Office by Ncell

KUALA LUMPUR - Axiata Group Berhad (“Axiata” of “the Group”) today confirms that its subsidiary company, Ncell Private Limited (“Ncell”), received a letter issued by the Large Taxpayers Office (“LTPO”) regarding the outstanding tax amount to be paid. This relates to the tax to be collected from Ncell in relation to the indirect transfer to Axiata Investments UK of an 80% stake in Ncell through the sale of Reynolds Holdings Limited (“Reynolds”) by the previous foreign investor, TeliaSonera Norway Nepal Holdings AS (“TeliaSonera” or the “Seller”), (the “Transaction”).

The letter stated that the assessment Order issued against the Seller, in relation to the Transaction, has been transferred to Ncell and further states that the balance amount of the Capital Gains Tax (“CGT”) arising from the Transaction due is NPR39.06 billion. Ncell has been ordered to deposit the said amount within seven days, or by 22 April 2019 (the “Letter”).

The issuance of this Letter is a part of the execution of the full written Order of the Supreme Court of Nepal (“SC”) dated 9 April 2019 in relation to a public interest litigation (“PIL”) filed by a group of Nepali individuals (Case No. 074-WO-0475). 

The abovementioned SC Order states that LTPO should determine and recover the outstanding tax amount to be paid in relation to the Transaction within three months from the date of receipt of the Order by the LTPO. It also states that the responsibility to pay tax lies with Ncell and Axiata, the latter who is not a party to the PIL.

Axiata and Ncell are currently reviewing the Letter and are considering appropriate course in relation to the Letter. To date, Axiata and Ncell have dutifully and responsibly complied with all relevant regulatory and legal requirements in relation to the Transaction and acknowledge the Order without prejudice to their remedial rights.

As the country’s largest taxpayer, Ncell contributed USD1.17 billion in taxes since Fiscal Year 2014/2015. In 2018 alone, Ncell paid USD257 million which accounted for 4.2% of total tax revenue of Nepal’s government that year. Over the last two Fiscal Years, Ncell’s total accumulated capital investment reached USD164 million, with USD66 million recorded in the last Fiscal Year.

Under its Corporate Social Responsibility ambit, Ncell has invested more than NPR680 million in various social projects identified as critical to the nation to include education, health, disaster management and environment. We believe that the Government of Nepal will be supportive of our commitment and use our investment as a demonstration of the willingness and openness of Nepal to attract further foreign investment.