It was done so as the the tax administration is in the process of taking necessary steps to recover the Capital Gain Tax (CGT). And as the custodian of the foreign exchange reserve, NRB is responsible to issue the final approval for dividend repatriation.
Axiata, the Malaysian telecommunication provider, had acquired Ncell’s stake from the Swedish company TeliaSonera last year. As per the agreement between the two companies, Axiata had to repatriate the dividend after fiscal 2012-13.
According to central bank officials, Axiata has set aside Rs 72 billion for dividend repatriation from 2012-13 to 2015-16. However, after NRB’s directive Axiata will not be able to take away dividend until the selling company TeliaSonera clears its tax liability.
According to the income tax law, 25 per cent CGT is applicable in any major deal. The acquiring company must directly pay 15 per cent to the government as tax deducted at source and the remaining 10 per cent needs to be filed by the selling company.
Axiata has only filed Rs 23.56 billion in two phases as CGT and has claimed that it has cleared all its tax liabilities.
TeliaSonera has claimed in a response to the letter from the Large Tax Payers’ Office, that it has met all the tax requirements while operating Ncell between 2008 and 2016 though it is accountable to pay the remaining 10 per cent of CGT.