Nepal government has won the arbitration case against the telecommunication giant Ncell Axiata Limited in the capital gains tax (CGT) dispute. After 4 years, the long-running case has attained its final verdict which now makes Ncell pay more profit tax to the government.
In Baisakh, 2076, Ncell’s parent company Axiata Group filed a case at the International Center for the Settlement of Investment Disputes (ICSID), an international investment dispute resolution body established by the World Bank. The group claimed that the state violated bilateral investment agreements, denied justice, and imposed taxes. The company claimed $500 million from the Nepal government as well.
In Chaitra 2078, government officials and lawyers took their side in the ICSID Permanent Court of Arbitration in The Hague. It was after the government decided to respond to the case.
The government stated that the sale of Ncell by the Swedish company TeliaSonera to the Malaysia-based Axiata in 2072 resulted in a capital profit of Rs 1.43 trillion.
The Director General of the Inland Revenue Department, Dirgha Raj Mainali has told Ukaalo that after the ruling Ncell will have to pay an additional 45 billion. However, the amount of tax payment needed will be calculated after the full verdict reaches the government.
Ncell to pay Nepal government Rs 62.63 billion in total in capital gains tax (CGT) case
On Baisakh 5, 2076, the Large Taxpayer Office ordered Ncell to pay Rs 62.63 billion in taxes, fees, and fines and pay the remaining amount 39.6 billion rupees within 1 week after deducting the paid amount. But Ncell claimed that it only had to pay Rs 14 billion 36 crores 53 lakh 70 thousand 600 in profit tax. After paying its last installment of the Capital gain tax (CGT), Ncell insisted on having no due amount to pay.
On Poush 15, 2076, the company paid Rs 4.50 billion profit tax to the tax office. Then on Chaitra 18, 2076, it paid Rs 4.60 billion to the government.
More details to follow
Phanindra Gautam, head of the International Law and Treaty Agreement Division of the Ministry of Law, said that the ruling came in favor of the Government of Nepal. “We are yet to analyze the details of the ruling, but our lawyers have informed us that Nepal has won the case”.
Now, Nepal won’t have to pay $500 million (Rs 66 billion in the current exchange rate) to Axiata which it had sought at the international arbitration.
The Ministry of Law, five law firms, and two experts defended Nepal in the capital gains tax case against Ncell. This is the first time that a local company appealed to an international body in a tax dispute in Nepal.
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