Ncell Tax Controversy: How Much Has Ncell Paid (and Avoided) in Nepal?
A complete, fact-checked breakdown of Nepal's biggest corporate tax dispute — the Rs 340 billion claim, the Section 57 capital gains battle, the ICSID arbitration, and what it all means ahead of the 2029 state takeover.
Ncell claims to have paid over Rs 340 billion in total taxes since its 2004 founding — making it one of Nepal's largest private taxpayers. However, this figure is contested. What is verifiably court-settled is a Rs 21.10 billion capital gains tax (reduced by the Supreme Court from an original Rs 39.06 billion assessment) tied to the 2016 TeliaSonera–Axiata ownership transfer. Separately, a Rs 60 billion Section 57 tax demand related to the 2021 Axiata-to-Spectrlite ownership change remains unpaid and stuck in litigation, alongside an unresolved Rs 840 million frequency fee claim. The company has also taken its tax disputes to international arbitration (ICSID) under the Nepal–UK investment treaty.
- Background: how Ncell became Nepal's tax flashpoint
- The capital gains tax saga: TeliaSonera to Axiata
- Section 57: the Rs 60 billion ownership transfer tax
- ICSID arbitration: Ncell's international legal shield
- Paid vs disputed: the complete financial picture
- Key players in the Ncell tax controversy
- How litigation has delayed billions in tax collection
- The 2029 state takeover and what it means
- Why this matters for Nepal's investment climate
- Frequently asked questions
๐ก Background: how Ncell became Nepal's tax flashpoint
Ncell is Nepal's largest private telecommunications company, holding a GSM cellular license issued by the Nepal Telecommunications Authority (NTA) on September 1, 2004. Under Section 25 of the Telecommunications Act 1997, a telecom license can be granted for a maximum of 25 years — meaning Ncell's license is legally set to expire on August 31, 2029.
What began as a straightforward telecom operating license has, over two decades, become entangled with offshore ownership transfers, disputed tax liabilities, and regulatory uncertainty that has turned Nepal's largest private telecom company into a defining case of governance failure. The controversy centers on a recurring pattern: each time Ncell's ownership changes hands through international corporate structures, a major tax dispute follows.
Ncell's ownership history in brief
Ncell was originally backed by Swedish-Finnish telecom giant TeliaSonera through a British Virgin Islands holding structure (Reynolds Holdings). In 2016, TeliaSonera sold its 80% stake to Malaysia's Axiata Group. In 2023, Axiata sold the same stake to Spectrlite UK, a company linked to Singapore-based businessman Satish Lal Acharya. Each transfer has triggered a fresh tax controversy.
๐ฐ The capital gains tax saga: TeliaSonera to Axiata
The most consequential and longest-running dispute began in 2016, when TeliaSonera sold its 80% stake in Reynolds Holdings (Ncell's parent) to Axiata for over $1 billion. Under Section 57 of Nepal's Income Tax Act, 2002, this kind of ownership change ordinarily triggers a capital gains tax (CGT) liability.
The legal principle that defined this case
Senior advocate Surendra Bhandari noted that while international practice generally holds the seller responsible for capital gains tax, the Supreme Court found it reasonable to put the burden on the buyer because the seller had already exited Nepal without settling the obligation — effectively establishing that buyers in Nepal must conduct thorough tax-liability due diligence before any acquisition.
๐ Section 57: the Rs 60 billion ownership transfer tax
Just as the TeliaSonera-Axiata CGT dispute was being resolved, a second and even larger tax dispute emerged — this time tied to the next ownership change, when Axiata sold its 80% stake to Spectrlite UK (linked to Satish Lal Acharya) around 2021–2023.
How the Rs 60 billion figure was calculated
The Income Tax Act states that a company must pay 25 percent tax of its net worth for the transfer of ownership of 50 percent or more of its shares. Based on this provision — Section 57 of the Income Tax Act, 2002 — the Large Taxpayers Office assessed a tax liability of Rs 57.90 billion on Ncell for the Axiata-to-Spectrlite ownership transfer on January 13, 2021, with the figure later cited as approximately Rs 60 billion including fines and late fees.
๐ ICSID arbitration: Ncell's international legal shield
Beyond Nepal's domestic courts, Ncell and its parent companies have repeatedly turned to international arbitration as an additional layer of legal defense against tax demands — a strategy that has significantly complicated the government's ability to collect disputed amounts.
What is ICSID and why does it matter here?
The International Centre for Settlement of Investment Disputes (ICSID), based in Washington D.C., is the World Bank's arbitration body for resolving disputes between governments and foreign investors. Ncell filed an application at ICSID claiming that Nepal's decision on the capital gains tax against Axiata violated the Bilateral Investment Treaty between Nepal and the United Kingdom.
More recently, Ncell's current management has invoked the same Nepal-UK bilateral investment protection treaty's provisions against nationalisation without compensation, signaling that international arbitration will likely remain central to the dispute as the 2029 license expiry approaches.
๐ Paid vs disputed: the complete financial picture
To understand the Ncell tax controversy clearly, it helps to separate what has actually been paid and court-confirmed from what remains contested. Here is the full financial picture as of mid-2026:
- Final Supreme Court-determined capital gains tax
- Relates to 2016 TeliaSonera–Axiata stake sale
- Reduced from original LTO demand of Rs 39.06 billion
- Considered legally closed by the courts
- Routine VAT + income tax for FY 2080/81 alone
- Ranks Ncell third among Nepal's highest taxpayers
- Part of cumulative claimed Rs 340 billion+ figure
- Consistent annual contribution from operations
- Section 57 tax for Axiata-to-Spectrlite transfer
- Court interim order has stayed payment since 2021
- Ncell argues it constitutes double taxation
- No final Supreme Court verdict as of mid-2026
- NTA frequency fee demand issued October 2021
- Covers fiscal years 2007/08 through 2020/21
- Ncell secured a court interim order against payment
- Nearly five years have passed without payment as of 2026
The Rs 340 billion figure deserves scrutiny
According to its own corporate filings, Ncell claims to have contributed over Rs 340 billion in various taxes to the state treasury since its inception, with figures from other sources citing over Rs 320 billion or Rs 360 billion by fiscal year 2024/25. This figure is the company's own self-reported cumulative number across two decades — it is not a single verified government audit total, and it bundles routine annual VAT/income tax (which is genuinely paid) together with disputed amounts the company frames favorably in its public communications. The actual, undisputed, court-confirmed special tax settlement is far smaller: Rs 21.10 billion.
๐ฅ Key players in the Ncell tax controversy
⏳ How litigation has delayed billions in tax collection
A consistent pattern throughout the Ncell saga is the use of prolonged litigation as a de facto delay mechanism. Nepal's investigative press has documented this pattern extensively.
A two-decade-old example: the 20-year frequency case
Spice Nepal (Ncell's earlier entity) appealed a Revenue Tribunal decision to the Supreme Court. After 20 years, a verdict was finally delivered on July 15, 2019, affirming that the original Department decision was correct all along. Because the case took 20 years to conclude, Ncell succeeded in delaying its revenue payment for two full decades — a stark illustration of how Nepal's slow judicial process can be leveraged by well-resourced corporate litigants.
This pattern continues today: as of 2026, currently seven lawsuits registered by Ncell remain pending in the Supreme Court, with a verdict still pending for a case registered by Ncell against the Inland Revenue Department in Lazimpat as recently as May 25, 2025. Another case scheduled for a hearing on June 11, 2026 was listed as "unable to be heard" due to time constraints, further pushing back resolution.
| Dispute | Amount | Years Pending | Current Status |
|---|---|---|---|
| Capital Gains Tax (TeliaSonera-Axiata) | Rs 21.10B (final) | 2016–2021 (5 years) | Resolved — court-settled |
| Section 57 Ownership Tax (Axiata-Spectrlite) | Rs 60B | 2021–ongoing (5+ years) | Stayed by interim court order |
| NTA Frequency Fee Arrears | Rs 840M | 2021–ongoing (5 years) | Stayed by interim court order |
| Spice Nepal historic revenue case | Undisclosed | 1999–2019 (20 years) | Resolved in govt's favor (delayed) |
| License renewal interest dispute | Rs 255M | 2024–ongoing | Ncell objects, proceeded anyway |
๐️ The 2029 state takeover and what it means
Section 33 of the Telecommunications Act, 1997 specifies that any telecommunications service provider with more than 50 percent of its total capital invested by foreign individuals or corporate entities must transfer ownership of its land, buildings, machinery, equipment, and structures to the Government of Nepal upon the expiration of the license period. Currently, 80 percent of Ncell's shares are held by Spectrlite UK — meaning this provision squarely applies.
The government isn't ready
While Ncell's board members are actively pulling strings behind the scenes to block the transfer, the state has failed to make adequate preparations to assume ownership. The government has not even drafted a procedural guideline on how to operate Ncell once ownership transfers to the state. When asked about preparations, NTA Director Min Prasad Aryal stated: "We are currently doing our homework on this matter."
In response, Ncell has proposed an alternative path. In January 2026, Ncell formally proposed to the government that it conduct an IPO and increase Nepali ownership above 50 percent — a structural change that would legally prevent nationalisation under the existing law. As of this writing, the government has not accepted or rejected that proposal.
๐ Why this matters for Nepal's investment climate
The Ncell controversy is not just a corporate dispute — it has become a defining test case for how Nepal handles foreign direct investment, tax enforcement, and regulatory consistency. The implications stretch well beyond a single company.
Cutting through the controversy: the genuine economic contribution
Ncell has been the single largest private taxpayer in Nepal's history — a fact that is not seriously disputed. With over NPR 320 billion contributed to government coffers, Ncell's track record demonstrates that properly regulated private telecommunications can significantly benefit national development. This is precisely why the unresolved disputes matter so much — they represent a tension between genuine revenue contribution and unresolved questions about how much more the company legally owes.
The coming months will reveal whether Nepal chooses a path of transparent regulation that attracts continued investment, or whether short-term revenue maximization through takeovers will define the telecommunications sector's future. For Nepal's 30 million citizens increasingly dependent on digital connectivity, these decisions carry implications far beyond corporate balance sheets.
The case has also drawn international attention through the Nepal Leaks investigation. According to exposรฉs by the Centre for Investigative Journalism and the International Consortium of Investigative Journalists, Ncell owners had used the company to launder money as foreign direct investment, with documents leaked through the Panama Papers implicating individuals connected to tax havens — adding a further layer of scrutiny to an already complex situation.
❓ Frequently asked questions
๐ Key Takeaways — Ncell Tax Controversy
- Ncell claims Rs 340 billion+ in cumulative taxes paid since 2004 — a self-reported figure combining routine taxes with the settled CGT payment.
- The court-confirmed, undisputed capital gains tax settlement is Rs 21.10 billion — reduced from an original Rs 39.06 billion LTO assessment by the Supreme Court.
- A separate Rs 60 billion Section 57 ownership transfer tax remains unpaid, stayed by a Supreme Court interim order since 2021 — still unresolved as of mid-2026.
- Rs 840 million in NTA frequency fees has also remained unpaid for nearly five years due to a similar court stay.
- Ncell and its former parent Axiata have used ICSID international arbitration under the Nepal-UK investment treaty to challenge Nepal's domestic tax authority — a strategy still active in 2026.
- A historic case shows Ncell's predecessor (Spice Nepal) successfully delayed a revenue payment for 20 years through litigation before the Supreme Court ultimately ruled against it in 2019.
- Ncell's 2029 license expiry triggers mandatory state takeover provisions under the Telecommunications Act — but the government has not prepared operational plans, while Ncell has proposed an IPO to avoid nationalization.
- The controversy represents a critical test of Nepal's tax enforcement capacity and investment climate credibility, with implications extending far beyond a single telecom company.
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