KUALA LUMPUR: Axiata Group Bhd
said its claims by its wholly-owned subsidiary Axiata Investments UK Ltd and 80%-owned Ncell Axiata Ltd against the government of Nepal over taxes imposed on the latter has been dismissed by the Bilateral Investment Treaty arbitration tribunal at the International Centre for Settlement of Investment Disputes.
In a statement, the telco said in view of the unfavourable outcome of the case, it will adjust its statement of comprehensive income by about RM376.6mil arising from the write-off of related receivable assets.
It added that it will assess any other financial impact, including further asset impairments, consequent to the award, but said no cashflow impact is expected.
"The award may have material impact on Axiata Group’s consolidated net assets per share and the earnings per share for the financial year ending Dec, 31, 2023," it said.
According to Axiata, owing to Nepal's non-adherence to tribunal orders during the early stage of the process, the tribunal ordered the Nepal government to pay about US$1.4mil (RM6.5mil) to Axiata and reimburse Ncell for the cost of a loan taken. No sums are payable by Axiata UK or Ncell under the award, it added.
The tribunal has also indicated in the award that Nepal should refrain from demanding any further tax, fees, penalties, or interests in relation to the transaction.
"Axiata respects the decision of the tribunal and is consulting its legal advisors in relation to the award.
"Further announcements will be made upon material developments arising from the matter," it added.
On Nov 21, 2019, the Supreme Court of Nepal adjudged that Ncell was liable to pay NPR21.1bil (about RM738.42mil) in outstanding capital gains tax (CGT), including interest and penalties, in connection with the sale of the entire equity interest of Ncell holding company Reynolds Holdings Ltd in 2016 by TeliaSonera Norway Nepal Holdings AS to Axiata UK.
Ncell subsequently settled the total demand amount of NPR22.45bil and an additional NPR990.25mil as interest to the large taxpayers office of Nepal.
However, Axiata and Ncell argued that the imposition of the capital gains tax by Nepal was unlawful and pursued legal action in international arbitration proceedings.
