Supreme Court to Scrutinize ICSID Verdict in Ncell Tax Dispute

In a significant development in the ongoing Ncell tax dispute, the Supreme Court of Nepal has decided to examine the verdict handed down by the International Center for the Settlement of Investment Disputes (ICSID). This decision follows a writ petition filed by Ncell, directing the submission of the ICSID decision to the Supreme Court.

The bench of Justices Anand Mohan Bhattarai and Nahkul Subedi acknowledged the importance of scrutinizing the arbitration decision before reaching a conclusion in the prolonged tax dispute involving Ncell. The dispute originated on December 21, 2015, following the acquisition of Reynolds Holdings—holding an 80 percent stake in Ncell—by the Malaysian telecom company Axiata.

In response to another writ petition filed by former secretary Dwarikanath Dhungel and others, the Supreme Court had previously mandated that Ncell settle tax obligations for the transaction under Section 57 of the Income Tax Act. Ncell complied with this directive, paying a substantial sum of Rs 47 billion in taxes.

However, in 2021, the Large Taxpayer Office ruled that Ncell is still obligated to pay an additional Rs 57 billion in taxes. Disputing the legality of this tax assessment, Ncell submitted a writ to the Supreme Court, leading to the current legal proceedings. During the course of the writ’s hearing, the Supreme Court has expressed its intent to carefully examine and evaluate the decision of the ICSID in order to make an informed ruling on the tax dispute.

This development adds a layer of international scrutiny to the already complex Ncell tax case, as the Supreme Court grapples with the implications of the ICSID verdict on the taxation obligations of the telecom giant. The outcome of this examination will likely have significant repercussions for Ncell and set a precedent for future international investment disputes in Nepal.