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Vodafone Asks For Informal Tax Talks With India

by Mary Swire, Tax-News.com, Hong Kong

26 August 2013

Vodafone has asked the Indian Government for "informal talks" as the two parties continue to search for a solution to their long running tax dispute.

A source told India's Economic Times that the Government had agreed to Vodafone's proposal, along with a request that the negotiations be held in India. The Government has advised the telecoms company to nominate a representative at the earliest opportunity.

In June, the Cabinet instructed the Finance Ministry to approach Vodafone with an offer for conciliatory talks. Vodafone pressed for more time, and appeared to be holding out hopes for the conciliation process to take place under the United Nations Commission on International Trade Law.

The Government continues to pursue Vodafone for USD2.2bn in back taxes and penalties in connection with its 2007 acquisition of Hutchison Essar, in spite of a 2012 Supreme Court ruling that the company was not liable for the bill. Vodafone has maintained throughout that no tax is payable on the transaction, but set aside the full USD2.2bn last year in anticipation of a deal being struck.

The Economic Times' source also claimed that the intention is for negotiators to draw up a set of "mutually agreed rules" that could allow them to progress with conciliation under a neutral jurisdiction.

TAGS: compliance | Finance | tax | tax compliance | India | tax avoidance | ministry of finance | tax authority | withholding tax | penalties | telecoms

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