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Vodafone Agrees To Meet Indian FM Officials

by Lorys Charalambous,, Cyprus

06 January 2014

Reports from India suggest that Vodafone has responded to an approach from the Finance Minister by agreeing to conciliation talks at the Ministry in an attempt to resolve one or more of the outstanding tax issues between the parties, and that the talks are to take place in January.

Vodafone is said to have asked for the talks to encompass all of the three or more issues on which there is dissent.

Separately, however, officials in the Ministry are saying that any agreement might require legislation to amend the country's tax laws. If true, then the process would stretch out for months, given the incoherent state of India's legislature and upcoming elections.

In December, it had appeared that Vodafone and India were inching closer to a settlement on their long standing dispute over a USD2.2bn bill for back taxes and penalties relating to the firm's 2007 acquisition of Hutchison Essar. The Finance Ministry asked Vodafone to put its views on the issue into writing, a request that came hot on the heels of a meeting between Finance Minister P. Chiambaram and the Vodafone CEO Vittorio Colao.

In a second dispute, the telecoms company had been handed a final assessment order, seeking the payment of INR37bn (USD598m) in taxes, which relates to a share transfer involving its Vodafone India Services subsidiary and the sale of a call centre business. The transfer, which took place in 2008-09, is alleged to have undervalued the shares in question.

A Vodafone spokesperson said of the charges: "There is no tax payable on this transaction and the company will file an appeal before the tax appeal tribunal as soon as possible."

In another, separate case, Vodafone was accused in February of undervaluing shares transferred between Vodafone India and Vodafone Teleservices Mauritius in 2007-08 by as much as INR13bn. A petition against the Transfer Pricing Order was filed with the Bombay High Court, but was rejected in October on the grounds that the transfer pricing authorities did have the right to investigate the supposedly unreported cross-border transaction. The Income Tax Department's Dispute Resolution Panel (DRP) was instructed to deal with the matter.

TAGS: Finance | Transfer Pricing | tax | business | India | Mauritius | law | legislation | transfer pricing | penalties | telecoms | services | Tax

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