With the CGT issue not being resolved, Kantipur wrote of tax evasion of around 2 billion by Ncell. Officials from Inland Revenue Department (IRD) claim that Ncell had shown higher costs and lesser profit in the international calls. This made Ncell issue a public notice refuting Kantipur article on tax evasion.
For each international calls made to Ncell, the telecom carrier abroad needs to pay interconnection charge to Ncell. After finding Ncell to have reduced its profit by showing higher expenses, LTPO accuses Ncell of tax evasion. They also reviewed the tax and assigned it to Ncell.
Ncell objecting the tax amount has requested to review the re-assessment of tax to the Director of IRD.
This tax amount for Interconnection Charge (IuC) of international calls is that of FY 2070/71 and 71/72. As per their rule, if they doubt the company to have not paid or less, they can examine the tax and apply the missing amount. Which should be done within 4 years of the respective FY.
As per the IRD official, they will also analyze the Ncell tax amount in further years as well.
Regarding the earlier CGT controversy, Ncell has moved for international arbitration. Nepal Government has already refused to involve as the tax issue is pending in the Supreme Court.
Ncell refutation
A day after the Kantipur daily’s front news, Ncell publishes a public notice with the refutation of the news article. Ncell says they refute and condemn the news article, published on July 31, 2019, without referring to Kantipur. They see the article as a deliberate attempt to misconstrue facts to mislead the public of Nepal with respect to the evasion of tax as to Ncell’s bona fides is based on malicious intent. Ncell also believes it as an attempt to cause damage to its reputation.
In the notice, Ncell further clarify in pointwise as (in their own words)
- Ncell has not evaded any tax as alleged in the news article. Ncell has simply challenged certain tax liabilities assessed/imposed by Large Taxpayers Office (LTPO) in relation to self-ta assessment returns filed by Ncell for few fiscal years by way of a petition of administrative review before Inland Revenue Department (IRD). Ncell’s petition of administrative review is still under consideration of IRD.
- The income tax Act, 2002 provides various judicial remedies including review of re-assessment of tax by the concerned tax office. As such, filing of lawsuit or review petition before a judicial body is a normal recourse for a taxpayer against any tax liability assessed or imposed by the Tax office.
- It is a legal right of any taxpayer including Ncell to approach to the Inland Revenue Department or Revenue Tribunal or the Supreme Court for the necessary remedy in the exercise of the legal rights.
- Ncell strongly condemns the use of mass media for publication of defaming content portraying evasion of tax by Ncell, with the intention to malign its goodwill and reputation as it discourages business sentiment in Nepal at large.
Ncell’s commitment
Ncell says they have contributed over NRs 210 billion in taxes from the inception to the last Fiscal year 2075/76. They say they have dutifully and responsibly conformed to all relevant regulatory and legal requirements.
Being a large taxpayer, Ncell reiterates to be compliant with the laws of Nepal. They also express their continuity to build a sustainable business for Ncell for the benefit of the country. Lastly, they say they have made a significant contribution to the socio-economic development of Nepal, providing direct, indirect jobs to over 93,800 jobs and serve 16.5 million customers.
They also express their commitment to be long term service provider in the country to further enhance digital connectivity and to improve the lives of all Nepalis.
We leave it to the public to have a judgment of this Ncell tax evasion article as written by Kantipur.
