Jan 11, 2018-Nepal Rastra Bank (NRB) has okayed privately owned telecom operator Ncell to repatriate dividends totalling Rs7.6 billion from the profits of the fiscal year 2015-16. The central bank gave the green light to Ncell after the Supreme Court cleared the way.
“We have allowed them to repatriate dividends after the apex court’s order,” said Narayan Prasad Poudel, executive director of NRB.
On December 24, Justices Om Prakash Mishra and Kedar Prasad Chalise issued the final verdict allowing repatriation of profits earned by the telecom service provider in the country. Stating that obstruction of dividend repatriation would adversely affect the company and its shareholders, the court directed the government not to obstruct the process.
The judges ruled that the Foreign Investment and Technology Transfer Act (1992) 5 (2) and the Foreign Exchange Act (1962) 10 (C) 1 allow a foreign company to send back profits earned on its investment.
NRB had barred dividend repatriation following a request from the Large Taxpayers Office. It had issued directives to bank and financial institutions not to provide foreign exchange facilities to companies associated with Ncell—Axiata and Reynolds Holdings, among others.
Although Ncell has accrued Rs72 billion in profits for four fiscal years from 2013-14 to 2016-17, it has asked the central bank for permission to repatriate the dividends from the profits for fiscal 2015-16.
It is believed that Ncell will seek approval for the remaining sum in the coming days. The telecom giant can repatriate 80 percent of the accrued profits as domestic investors have a claim on the remaining 20 percent.
In April 2015, Swedish-based telecom company Telia sold 60.4 percent of its shares in Ncell to Malaysian-based telecom giant Axiata. Axiata acquired another 19.6 percent in Ncell from SEA Telecom Investments BV, a company owned by Visor based in Kazakhstan.
Axiata acquired the shares for Rs144 billion. Ever since the deal, the government has maintained that tax will be levied on the transaction while TeliaSonera has argued that the deal is not taxable in Nepal.
In June, the Large Taxpayers Office concluded that the government needed to recover Rs60.71 billion in capital gains tax from the Ncell buyout deal. Following pressure from the government, Ncell has deposited Rs23.6 billion in capital gains tax so far, of which Rs9.97 billion was paid in May 2016 and Rs13.6 billion in the first week of June.
The Supreme Court also ruled that legal issues related to determining the capital gains tax in share transfers between Nepali and foreign companies should be decided by a full bench.
(Source- The Kathmandu Post)
