Tax review may end Vodafone dispute

10 Oct 2012

A government panel tasked with reviewing recent controversial tax legislation has recommended that the government not retrospectively apply rules to tax asset transfers, reports Reuters. The recommendation, if applied, would ostensibly end a long standing battle between Vodafone and the Indian government. As noted by TeleGeography’s GlobalComms Database, the UK group has been at loggerheads with the Indian government over a USD2 billion tax bill relating to its 2007 acquisition of majority control of Indian cellco Hutchison Essar (now Vodafone India). Whilst it appeared in January 2012 that the matter had been laid to rest by a Supreme Court ruling in favour of Vodafone, in March the government retrospectively amended tax rules allowing it to renew its demand.

The panel reviewing the amendment noted that in cases where the government wanted to use the retrospective tax rules tax liability would be on the seller of the assets, adding that there should be no penalty or interest imposed in such cases.

India, Vodafone Group, Vodafone India