KUALA LUMPUR (Dec 19): Axiata Group Bhd has announced that two of its units, Axiata Investments (UK) Ltd and Ncell Private Ltd, have been granted provisional measure orders by an international tribunal preventing Nepal and its authorities from demanding Ncell pay NPR22.45 billion (RM818 million) in outstanding capital gains tax (CGT).

The order also restraints them from taking any steps which would alter the status quo between Axiata UK, Ncell and Nepal or aggravate the present dispute, said Axiata in a media statement attached to a filing to Bursa Malaysia.

The order from the tribunal was made after Axiata and Ncell commenced arbitration proceedings against the Nepali Government under a 1993 Promotion and Protection of Investments Agreement between the Governments of United Kingdom and Northern Ireland and Nepal.

Axiata said the tribunal yesterday had granted the companies’ application for provisional measures in large part and ordered that Nepal, its organs, agencies and officials, including the Large Taxpayers Office (LTPO) and the Inland Revenue Department (IRD) immediately be restrained from taking any steps to enforce or give effect to the demand letter served by the LPTO against Ncell dated Dec 6 2019 demanding that Ncell pay NPR22.45 billion  in outstanding CGT (including interest and penalties).

The CGT claim relates to the 2016 acquisition by Axiata Investments (UK) of 100% of Reynolds Holdings Ltd which owned Ncell, from TeliaSonera Norway Nepal Holdings AS for US$1.365 billion.

Axiata said in the arbitration, its units would argue, among others, that Nepal’s act of imposing CGT in connection with the transaction contravenes Nepal’s international legal obligations under the agreement.

Axiata UK and Ncell will also seek remedies including restitution of sums already paid, a permanent injunction against further attempts to collect CGT from Ncell in connection with the transaction and damages for all losses suffered in consequence of Nepal's unlawful conduct, the company added.

Shares of Axiata closed five sen or 1.18% lower at RM4.20, valuing the company at RM38.49 billion. Some 5.21 million shares were traded. Over the past year, the counter has gained 8.81%.