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Vodafone Faces Setback In Dispute Over $2bn Tax Bill

by Glen Shapiro, LawAndTax-News.com, New York

02 November 2007

The Indian government last week scored a point in its efforts to ensure Vodafone pays around $2 billion in capital gains tax on its acquisition of mobile phone firm Hutchison Essar earlier this year.

This news comes just weeks after Arun Sarin, the CEO for mobile phone giant Vodafone, played down speculation and controversy surrounding the company's decision to take the Indian Tax Authority to court over the issue.

However, the latest news is that the Bombay High Court has given India's income tax department the green light to go ahead with an investigation into the claim.

Another hearing has been scheduled on the matter for December of this year, according to national and international media reports.

The case has had a high profile, and is being followed closely by multinational firms and commentators alike. Arun Sarin has continually contested the the CGT demand, stating that it is usually the responsibility of the seller to pay, not the buyer.

Mr. Sarin has also argued that Hong Kong-based seller, Hutchison, is outside of India's jurisdiction.

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