By John Lee.
Reuters reports that Zain Iraq is to pay $94 million to settle a tax case related to the 2007 acquisition of rival operator Iraqna from Egypt’s Orascom Telecom.
Iraq’s General Commission of Taxes (GCT) claimed Zain Iraq owed $187 million in capital gains tax due on its $1.2 billion purchase of the company.
Unusually, the government tried to levy the capital gains tax on the asset buyer rather than on the seller.
Zain said in a statement that, under the settlement, Iraqi authorities will drop their claims against Zain Iraq, cancel associated owed interest and penalties, and allow Zain Iraq to appeal against additional tax assessments on itself and Iraqna for the respective periods of 2004-2010 and 2004-2007.
Restrictions on Zain Iraq’s shares and its bank accounts, which the authorities had frozen, will also be lifted.