An international court has directed the Nepal government not to impose capital gains tax on Ncell buyout deal for the time being.
This decision could bring the process of collecting Rs 22.4 billion from the largest private telecom company to a halt.
The International Center for Settlement of Investment Disputes yesterday issued an interim order directing the government, including the Inland Revenue Department and Large Taxpayers’ Office, not to “take any steps” to enforce its decision to collect Rs 22.4 billion in outstanding capital gains tax, including interest and penalties, from the sale of Ncell by TeliaSonera Norway to Axiata UK.
Axiata had acquired 80 per cent stake in Ncell for $1.4 billion in April 2016.
The interim order was issued on the basis of arbitration proceedings initiated by Axiata Investments (UK) and Ncell against the Nepal government.
This indicates the government may have to suspend its plan to collect outstanding taxes from Ncell.
It is not known when the US-based court will issue a final order in the case.
The final verdict issued by an international arbitration court will be binding for the Nepal government and failure to enforce it may prompt the court to seize and auction Nepal’s assets abroad to compensate the plaintiff.