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Vodafone Reacts To Indian Tax Conciliation Plans

by Mary Swire,, Hong Kong

02 January 2014

Vodafone has responded to the Indian Government's proposals for conciliation talks, designed to bring one of their long running tax rows to a close.

The telecoms giant was given until December 31 to deliver its final answer on the offer.

According to Finance Minister P. Chidambaram, Vodafone consulted multiple legal advisors following a meeting between himself and the company's Chief Executive Vittorio Colao on December 3. Vodafone did not, however, "seem to know which is the correct legal advice," Chidambaram told an Indian television station.

His Department wrote to Vodafone last week, to set the deadline.

Vodafone has long been locked in a dispute with the Indian tax authorities over its 2007 acquisition of Hutchison Essar. It has consistently maintained that it is not liable for a USD2.2bn bill in back taxes and penalties relating to the deal. Although the Supreme Court ruled in Vodafone's favour in January, 2012, retrospective changes to the tax laws were introduced just months later, throwing the ruling into doubt.

Vodafone subsequently set aside the full USD2.2bn for the settlement of its Indian tax liabilities, but appeared to be holding out for conciliation talks to proceed under the gaze of a neutral, external authority. The Government, on the other hand, had demanded that discussions take place under Indian law.

A Finance Ministry official yesterday told the Indian media that a reply had been received. It is not yet known whether Vodafone has accepted the Government's suggestion of an out of court settlement.

TAGS: court | compliance | Finance | tax | tax compliance | India | tax avoidance | tax incentives | revenue guidance | law | ministry of finance | tax authority | tax planning | revenue statistics | penalties | telecoms | Tax | Tax Evasion

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