British telecoms group Vodafone has announced that it is considering a number of courses of action in relation to a proposal from India’s finance ministry to amend some tax rules.
As part of India’s 2012-2013 budget, unveiled in mid-March, …
British telecoms group Vodafone has announced that it is considering a number of courses of action in relation to a proposal from India’s finance ministry to amend some tax rules.
As part of India’s 2012-2013 budget, unveiled in mid-March, India’s finance ministry reportedly proposed to tax all acquisitions of local assets by foreign companies since 1962.
This recommendation came a couple of months after India’s Supreme Court concluded that Vodafone was not liable for a US$2.4bn withholding tax bill linked to the purchase of a 67% stake in Hutchison Essar (now known as Vodafone India) in 2007.
The Supreme Court recently reasserted its decision by dismissing an income tax department’s plea to review the verdict.
Shortly after the tax amendment proposal was made, Vodafone had said that its lawyers were examining the change but that it did not expect that it would have any impact on the Supreme Court’s decision.
However, in a statement today, Vodafone said “it believes the proposed changes to the Indian taxation regime, as set out in the Finance Bill, are grossly unjust.
“The proposed changes in the Finance Bill fundamentally contradict the firm conclusions of the apex court and as such raise important constitutional questions for India as well as widespread and profound concerns in the minds of international investors.”
The Vodafone tax case has attracted wide interest as the outcome is expected to have an impact on foreign investments in India.