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Vodafone Seeking 'Neutral' Arbitrator In Indian Tax Dispute

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

07 August 2013


Vodafone is continuing to resist the proposed holding of conciliation talks under the Indian legal system, it has been claimed.

In June, the Indian Cabinet instructed the Finance Ministry to press ahead with plans for conciliatory negotiations with the telecoms giant, as a means of bringing a long-running tax dispute to an end. Vodafone requested that it be permitted more time to consider the offer before submitting a formal response, and stated that it preferred to proceed with conciliation under the United Nations Commission on International Trade Law.

Vodafone appears to be sticking to this line. India's Economic Times claims to have spoken with a source who has said that if the talks are held under India's terms, and fail, Vodafone "might once again be dragged into litigation under the Indian legal system." According to the paper, Vodafone is seeking that talks be held under a "neutral authority."

Retrospective changes to the Indian Income Tax Act, introduced last year, threw into doubt a then recent Supreme Court ruling that Vodafone was not liable for a USD2.2bn bill in back taxes and penalties in connection with its 2007 acquisition of Hutchison Essar. At various points since, high ranking members of the Indian Government have stressed their willingness to reach a settlement and have suggested that a deal might be imminent. No such agreement has materialized, and Vodafone continues to stress that no tax is payable on the transaction.

TAGS: compliance | Finance | tax | tax compliance | India | tax avoidance | ministry of finance | tax authority | tax planning | revenue statistics | penalties | telecoms

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