This article examines about Tax related corruption scandals in Nepal.
Tax Settlement commission Scandal 2016
Tax Settlement commission had illegally given up to 99% tax waivers to some business which caused state to lose up to Rs21 billion in tax.
Timeline
2015 Feb: The Tax Settlement Commission (TSC) formed. Its chairman was Lumba Dhwaj Mahat (chartered accountant), and members were Chuda Mani Sharma (former Director General of the Inland Revenue department), and Umesh Prasad Dhakal (chartered accountant).
2016 Apr: Auditor General Office questioned Rs21 billion tax exemption granted by TSC to various enterprises, as some of the business had got over 99% of tax liabilities exemptions.
2017 July 16: CIAA filed cases against the against TSC members Chudamani Sharma, chair Lumba Dhwaj Mahat, Umesh Prasad Dhakal, on the charge of embezzling Rs10.02 billion in tax settlement.
2018 Jan: CIAA filed a different corruption case against Chudamani Sharma on the charge of amassing property amounting to Rs 42.95 million, which was disproportionate to his known sources of income. The CIAA found only Rs36.37 millions of Sharma’s properties was earned from legal sources.
2021 Jun 23: CIAA filed an additional corruption case at the Special Court after nearly 4 years against the TSC trio, saying the earlier investigation had not incorporated all the decisions taken by the commission. CIAA claimed these office bearer cause over Rs1 billion loss to government in tax.
NCELL Tax scandal 2016
TeliaSonera did not pay Rs 22.44 billion capital gain tax after selling its stake of Ncell to Axiata in 2016. Ncell finally paid all due tax by 2020.
Timeline
2016 Apr: a Swedish-Norwegian company TeliaSonera sold 80 percent stake of NCELL to the Malaysian company Axiata at Rs144 billion and exited Nepal. The deal was done abroad as Axiata (UK) purchased the owner of Ncell named the Reynolds Holding company from TeliaSonera. Reynolds Holding company is registered at tax haven state Saint Kitts and Nevis. TeliaSonera asked Nepal's Inland revenue dept, but Dept failed to response in time.
2016 April 8: the parliamentary Finance Committee was called off abruptly following “political pressure from the highest level” to pave the way for the completion of the deal.
2016: Auditor general after the 54th annual report said the deal was taxable in Nepal as per Clause 57 of the Income Tax Act and stated that the government needs to raise Rs32 billion as capital gains tax from the buyout deal worth Rs144 billion for 80 percent stake. This report reinforced the belief that the deal is taxable and encouraged an anti-Ncell campaign.
2018 Jan: Former auditor general Sukdev Bhattarai Khatri, former government secretaries Dwarika Nath Dhungel, and Jagadish Chandra Baral filed a writ at supreme court.
2018 feb 6: Supreme court ruled that Ncell and its parent company Axiata are liable to pay tax after former owner TeliaSonera exited Nepal without paying tax. It also created the debate whether the buyer should pay capital gain tax if gov can't obtain from the seller.
2018 Apr 16: Large Taxpayer Office (LTO) determined the combined capital gain tax liability to Ncell and Axiata is Rs62.63 billion. Since the company had already paid Rs23.57 billon they order to pay remaining Rs39.06 billion within one week.
2018 April 22: Ncell moved the Supreme Court claiming that the tax office determined the tax amount without following the due process and its outstanding liability stood at just Rs14.36 billion.
2018 Apr: Ncell and Axiata (UK), which now owns Reynolds Holding, filed an application at ICSID, claiming that Nepal’s conduct in relation to capital gains tax imposed on the mobile company is against the Bilateral Investment Treaty between Nepal and the United Kingdom.
2018 Aug 26: Supreme Court (SC) scrapped the tax determined by the Large Taxpayers’ Office for Ncell, questioning their tax determination process. In the full text of this verdict released on Nov 21, SC said Ncell owes only Rs 21.1 billion in outstanding tax.
2018 Dec 6: LTO determined capital gains tax at Rs 22.44 billion including fines and ordered Ncell to pay it by December 19. The company missed the deadline.
2018 Dec 18: ICSID issued a provisional order staying the tax clearance process.
2018 Dec 22: LTO wrote a follow-up letter to Ncell, asking it to clear the dues within 15 days.
2019 Dec 31: Ncell paid first tranche worth Rs 4.5 billion of the outstanding tax to LTO.
2020 Mar 31: Ncell paid second tranche worth Rs 4.6 billion taxes to LTO.
2020 Apr 12: Ncell paid remaining Rs 14.33 billion to govt, fulfills all capital gains tax liabilities. (link)