Investors

1.         INTRODUCTION

Axiata Group Berhad (“Axiata”) wishes to inform that Ncell Private Limited (“Ncell”), its indirect 80% owned subsidiary in the Federal Democratic Republic of Nepal had on 21 April 2019 filed a writ petition with the Supreme Court of Nepal (“SC”) in relation to the SC’s written order of 9 April 2019 (“SC Order”).

2.         BACKGROUND

a) In 2016, Axiata through its wholly owned subsidiary Axiata Investments (UK) Limited (“Axiata UK”) acquired Reynolds Holdings Limited (“Reynolds”) from TeliaSonera Norway Nepal Holdings AS (“Telia”) (“Transaction”). Reynolds is the immediate holding company of Ncell. 

b) Following the completion of the Transaction and upon making two advance deposits of approximately NPR13.6 billion in aggregate to the Large Taxpayers Office of Nepal (“LTPO”), the LTPO in its letter of 4 June 2017 conclusively certified and acknowledged that Ncell has fully complied with the direction of depositing advance tax pursuant to Section 95A of the Income Tax Act, 2058 (2002) (“ITA”)  and that Ncell had been fully cleared of responsibilities of Capital Gains Tax (“CGT”) arising under the ITA as it relates to the Transaction.

c) Notwithstanding the foregoing, two public interest litigation were filed by a group of Nepali individuals with the SC in relation to the claims of CGT over the Transaction (“PIL Litigation”), broadly pleading that the onus of payment of CGT is on Ncell, Reynolds and Axiata UK. The decision in one of PIL Litigation (Case No. 074-WO-0475) culminated in the SC Order.

d) The SC Order states that the LTPO should, within three months from the date of its receipt of the SC Order conduct an assessment to determine the outstanding CGT to be paid in relation to the Transaction (“SC Direction”). The SC Order also stated that the responsibility to pay tax lies with Ncell and Axiata.

e) On 16 April 2019, LTPO issued a letter to Ncell stating that pursuant to the SC Direction, the assessment order initially issued to Telia (“Telia Assessment”) has been transferred to Ncell and further that the balance amount of the CGT arising from the Transaction is NPR39.06 billion, which is required to be deposited with the LTPO by 22 April 2019 (“LTPO Direction”).

3.         SUBMISSION OF A WRIT PETITION WITH THE SC 

3.1      Ncell had on 21 April 2019 filed a Writ of Certiorari, Prohibition and Mandamus to the SC against the LTPO, Inland Revenue Department of Nepal and the Ministry of Finance of Nepal (“Ncell Application”). The Ncell Application was accepted by the SC today.  

3.2      Ncell has been duly advised by its professional advisors that there are supportable grounds to challenge the legality of the LTPO Direction, which grounds include but is not limited to the following: - 

(a)     That the LTPO Direction in transferring the Telia Assessment unto Ncell is not in compliance with the procedures as required under the ITA;

(b)     That the LTPO is obligated to undertake a tax assessment on Ncell and not, as demanded in the LTPO Direction, merely a tax collection;

(c)     That in issuing the LTPO Direction, the LTPO has:-   

(i)      failed in providing or affording Ncell the opportunity in making any submission or representation in relation to the imposed tax liability; and

(ii)     failed in providing Ncell with the option to file or submit an application for administrative review over the LTPO Direction.

3.3     Premised on the aforesaid grounds, the Ncell Application seeks for an annulment of the LTPO Direction as well as all decisions, communications, circulars, actions and proceedings in relation thereto against Ncell.

4.        Further Material Developments

Axiata will make further announcements upon material developments arising from the Ncell Application.

This announcement is dated 22 April 2019.