Kathmandu, November 5
The Nepal LP Gas Industry Association has said that many gas companies are ready to merge with one another.
However, the association has made it a condition that the government ensure that Sections 57 and 59(a) of the Income Tax Act, 2002, do not apply to such mergers.
The association’s position comes after Nepal Oil Corporation (NOC), through its approved policy and programme for the current fiscal year 2083/84, adopted a policy of encouraging mergers among LPG companies.
Point 32 of the corporation’s policy and programme states that the policy of merging gas companies operating under different names and brands will be continued to facilitate the distribution of LPG and promote consumer interests.
To implement the policy, NOC had sent a letter to the Gas Industry Association, requesting it to encourage companies to merge and prepare an action plan accordingly.
“Most companies could merge if arrangements are made through the corporation to ensure that Sections 57 and 59(a) of the Income Tax Act, 2002, are not triggered,” the association stated in its letter.
Section 57 of the Income Tax Act stipulates that if more than 50 per cent of a company’s ownership changes, it is treated as a new company and becomes liable to pay taxes, including capital gains tax, accordingly.
The Gas Industry Association has urged the government, through NOC, to initiate efforts to secure an exemption from this tax provision.
