DUBAI Dec 21 Zain Iraq will pay $94
million to settle a tax case related to the 2007 acquisition of
rival operator Iraqna from Egypt's Orascom Telecom, its Kuwaiti
parent Zain said on Wednesday.
Iraq's tax authority, the General Commission of Taxes (GCT),
claimed Zain Iraq, the country's biggest mobile network operator
by subscribers, owed $187 million in capital gains tax due on
its $1.2 billion purchase of Iraqna.
Unusually, the government tried to levy the capital gains
tax on Zain Iraq as the asset buyer, rather than on the seller,
Egypt's Orascom Telecom, which was later renamed Global Telecom
Under the settlement with the GCT and the country's Ministry
of Finance the Iraqi authorities will drop its 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, Zain said in a statement.
Restrictions on Zain Iraq's shares and its bank accounts,
which the authorities had frozen, will also be lifted. Part of
the settlement figure will be paid using cash in these bank
accounts, the statement added, without specifying an amount.
According to its third-quarter results statement, Zain Group
had bank balances worth 128 million dinars ($418.3 million)
blocked due to various legal cases in Iraq, including the claim
against capital gains.
In a separate bourse statement Zain Group said it would book
an impairment charge of $42.6 million as a result of the
($1 = 0.3060 Kuwaiti dinars)
(Reporting by Alexander Cornwell; Editing by David French, Greg