UK-based Vodafone has threatened the Indian government with international arbitration proceedings to end their USD2.2 billion tax battle, reports Reuters. As previously noted by CommsUpdate, India’s apex court ruled in January that Vodafone was not liable for the USD2.2 billion in back taxes and penalties. However, proposals in March sought to amend tax laws, allowing the government to renew its fight with Vodafone. Vodafone has served a dispute notice against the Indian government to protest the tax proposals, saying that it was the first step before commencing international arbitration.
In light of the recent cancellation of 122 2G licences that has resulted in international investors such as UAE’s Etisalat withdrawing from India, and threatened significant investment from Norway’s Telenor and Russia’s Sistema, Vodafone has couched its complaint in criticism of the wider climate for foreign investment in India: ‘The Indian government’s retrospective tax proposals have raised significant and widespread concern within India and internationally, and have been criticised by businesses and industry.’