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Vodafone Asks For More Time On Indian Dispute

by Mary Swire,, Hong Kong

27 June 2013

Vodafone has written to India's Central Board of Direct Taxation to request more time to reply to a conciliation offer.

Earlier this month, the Indian Cabinet gave the green light to Finance Ministry proposals for conciliatory talks with the telecoms company. Vodafone has been locked in a long-running dispute with the Indian tax authorities over its 2007 acquisition of mobile phone company Hutchison Essar.

It appeared that Vodafone had won its battle last January, when the Supreme Court ruled that it was not liable for a USD2.2bn bill in back taxes and penalties in connection with the deal. Retrospective changes to the tax laws introduced later that year threw the ruling into doubt, and Vodafone eventually set aside the full USD2.2bn for the settlement of its Indian tax liabilities. Hopes for an agreement were again raised by the Indian Finance Minister P. Chidambaram, who said that he was optimistic that a settlement could be reached by the end of January. No formal progress was ever announced.

Vodafone's latest response has been to ask for more time before it is required to submit an official response to the conciliation offer. In a statement, the company says that it desires conciliation under the United Nations Commission on International Trade Law. This may not be possible, however, were Vodafone to proceed with the conciliation process provided under the Indian Arbitration Act.

Were the dispute finally brought to an end, both the Vodafone board and the Indian Cabinet would have to sign off on any deal. In addition, the Indian Parliament would be required to pass the necessary amendments to the Income Tax Act.

TAGS: compliance | Finance | tax | tax compliance | India | tax avoidance | law | United Nations (UN) | United Kingdom | tax authority | revenue statistics | penalties | telecoms

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