Supreme Court clears the deck for tax authority to recover unpaid taxes from controversial businessman Sumargi
Jun 24, 2019-
The Supreme Court on Sunday paved the way for the tax authority to collect unpaid capital gains tax from controversial businessman Ajeya Raj Sumargi for selling 75 percent of his shares in Nepal Satellite Telecom seven years ago.
The tax authority has determined tax liability of Rs4.31 billion for Sumargi after he failed to pay capital gains tax when he sold the shares to Cyprus-based Airbell Service, which was later purchased by Teliasonera, the previous owner of Ncell—the private sector telecom giant in Nepal.
By refusing to pay the tax, Nepal Satellite Telecom had moved the apex court on May 15. A single bench of Justice Bam Kumar Shrestha on May 22 had issued an interim order preventing the tax authority from recovering the unpaid capital gains tax.
However on Sunday, a joint bench of Justices Susmalata Mathema and Manoj Kumar Sharma decided to vacate the interim order, paving the way for the tax authority to raise the unpaid taxes.
According to Inland Revenue Department, Sumargi sold his stake in Nepal Satellite Telecom for Rs5.63 billion, but failed to pay capital gains tax amounting to Rs1.4 billion (25 percent of the transaction amount per the law).
But charging Sumargi of deliberately defaulting on taxes, the tax authority determined his tax liability by incorporating both fines and interest.
On May 15, the tax authority had emailed a letter to Nepal Satellite Telecom mentioning about his tax liability.
According to the Inland Revenue Department, it had reminded the company by sending a hard copy of the May 17 letter via email and the post after it refused to acknowledge the letter.
Sumargi’s transactions over the years have landed in controversy and authorities have been looking into them, suspecting money laundering.
In January, an investigation led by the Centre for Investigative Journalism Nepal and the International Consortium of Investigative Journalists revealed that Sumargi had laundered money through Airbell and two other offshore companies—Zhodar and Tipologia—on the pretext of Foreign Direct Investment.
According to the report, Sumargi has transferred a total of $63.2 million in nine installments from Airbell to companies he owned in Nepal.
The report ‘NepaLeaks 2019’ found that Sumargi and Arjun Sharma among 74 Nepali nationals had set up offshore companies in the British Virgin Islands, Cyprus, Egypt and Belarus to launder money.
Sharma is the director of Muktishree Pvt Ltd, a company that Sumargi owns. These businessmen were found to have exploited tax regimes and broken Nepal’s laws using the offshore companies to launder money in Nepal and repatriate profits to foreign countries.
These companies—Zhodar, Airbell and Tipologia—have ties with TeliaSonera, the company that left Nepal after evading taxes in the 2015 Ncell buyout deal, according to the NepaLeaks report.
In 2018, a government report had also uncovered Sumargi's involvement in shady business deals and had determined that he had made 42 fund transfers worth over $118 million from offshore tax havens.
The money entered Nepali banks, particularly Nabil and Nepal Investment Bank, in the form of loans, starting in January 2008 until 2013. The beneficiaries of 97 percent of the funds remitted from abroad were four companies that Sumargi owned—Nepal Satellite Telecom, Muktishree Pvt Ltd, Muktishree Cement and Muktishree Telecom
Published: 24-06-2019 08:03