Vodafone has called for a conciliation process to resolve its tax disputes with the Indian government, according to Hasmukh Adhia, revenue secretary for the finance ministry. A resolution could pay the way for an IPO of the Indian unit next year.
Vodafone (LSE:VOD) has called for a conciliation process to resolve its tax disputes with the Indian government, according to Hasmukh Adhia, revenue secretary for the finance ministry.
Adhia said in a tweet that Vodafone had “in a written communication expressed its desire to go for conciliation for its tax disputes with India”.
In a subsequent post, he added: “In response, the government has held one preliminary meeting to explore terms of reference of such a conciliation” on 10 November.
Adhia noted that terms of reference are yet to be finalised and will require follow-up meetings.
The Central Board of Direct Taxes reiterated Adhia’s comments in its own statement.
A Vodafone spokesperson said it would not comment on specific enquiries but added: “I will say, as a more general comment, that we have always made clear our openness to discussing the possibility of settlement, but the content of any discussions we may have with the Indian government remains confidential.”
Vodafone CEO Vittorio Colao (pictured) has said the company will decide next fiscal year whether to move ahead with an IPO of its Indian unit, the country’s second largest telco. The UK-based carrier has been considering such a transaction for years, but the assumption has always been that it would wait until its tax disputes were resolved.
The operator is one of multiple foreign companies to have faced accusations of underpaying local taxes, but there are now signs that authorities are seeking to make it easier for international firms to do business.
Last month, the Bombay High Court ruled in favour of Vodafone in a £450m (US$690m) tax case covering the treatment of a call centre and share options following its US$10.9bn takeover of Hutchison Essar in 2007.
However, a larger tax case concerning the 2007 deal remain unresolved.
An Economic Times report published before the conciliation statements said the government had offered to settle an Rs200bn (US$3bn) tax dispute with Vodafone if it agreed to pay the Rs79.98bn (US$1.2bn) principal amount, waiving interest and penalties.