CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Vodafone Could Set Aside Billions For Indian Tax Liabilities

Vodafone Could Set Aside Billions For Indian Tax Liabilities

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

21 September 2012


Vodafone could set aside USD2.2bn for the payment of its Indian tax liabilities, as the telecoms giant's long-running battle over its acquisition of Hutchinson Essar shows no sign of ending.

In January, the India government lost its five-year battle with Vodafone in the Supreme Court when it was ruled that the company was not liable for a USD2.2bn bill in back taxes and penalties in connection with its acquisition of a majority stake in mobile phone company Hutchinson Essar in 2007. The government was also ordered to repay the USD496m deposit paid by Vodafone in late 2010, plus 4% interest.

According to Vodafone's Chief Financial Officer Andy Halford, the company may however now need to make provision to cover its legal risks in India in light of the introduction of controversial new retroactive income tax legislation.

Concerns were raised by Vodafone in April that the government's Finance Bill, introduced in March, could overturn the Court's verdict. The transaction had originally been targeted by Indian tax authorities because a Dutch-registered subsidiary of Vodafone Group had made its payment to a Cayman Islands-registered subsidiary of HTIL in order to acquire the 67% stake in Hutchinson Essar.

The Finance Bill was shaped so as to bring such transactions into the Indian tax net. It clarifies that “an asset or a capital asset being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be and shall always be deemed to have been situated in India if the share or interest derives, directly or indirectly, its value substantially from the assets located in India”.

In August, reports surfaced that the new Finance Minister Shri P. Chidambaram had advised his department that it may still be able to recover the taxes from Vodafone. The government's claims would be based on these retrospective amendments.

A decision will be made by Vodafone by November, Halford has said.

TAGS: capital gains tax (CGT) | compliance | Finance | tax | tax compliance | India | tax avoidance | interest | legislation | tax planning | tax rates | regulation | penalties | legislation amendments | telecoms

To see today's news, click here.

Leave a comment

Read our Posting Guidelines

 






Close

Password Reminder

Please enter your email address to receive a password reminder.

 

Log into Tax-News+
Not registered yet? Find out about our daily news alert service »

 Email: 
 Password: 

Login »

Forgotten your password?







Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Tax-News+ Updates

Receive FREE daily updates from Tax-News.com, straight to your inbox. Register Now!

For a tailored solution, choose to receive selected news updates for your preferred jurisdictions and topics, with our enhanced Tax-News+ subscriber service. Read more...

 

Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »