The Government of Nepal (GoN) has announced that it will accept the recent decision made by the Public International Tribunal regarding the Ncell profit tax.

Axiata Investments (UK) Limited and Ncell had filed a case at the International Centre for Settlement of Investment Disputes (ICSID), an international investment dispute resolution body established by the World Bank in May 2019, after Nepal sought to recover capital gains tax (CGT) from Ncell following its sale by Swedish multinational TeliaSonera to Axiata (UK) in April 2016.

Ncell and its parent company Axiata claimed that former Prime Minister KP Sharma Oli assured no CGT would be charged while buying Ncell in 2015.

Axiata filed a case seeking compensation of Rs. 66 billion from the Nepal government for losses caused, along with annual interest of 16 percent and arbitration expenses, in relation to profit tax associated with their purchase of Nepal’s telecommunication service provider.

The Tribunal, formed by ICSID rejected Axiata’s claim and ruled in favor of the Nepal government, however, the government will have to pay approximately Rs. 1 billion in arbitration fees. While some issues related to Ncell’s purchase and sale are still in confusion, the matter concerning profit tax is considered settled.

Similarly, it is observed that the government will lose pending Rs. 57 billion including original tax liability, interest, and fines for the company’s failure to pay applicable taxes on time as the tribunal also indicated that Nepal should refrain from demanding any further tax, fees, penalties, or interests in relation to the transaction.

The government has decided that the favorable outcome of the case, which it won, will benefit the country by avoiding a large compensation fee. A cabinet meeting held on Tuesday extended thanks to all those who made efforts from the Nepal side in the Ncell case.