Vodafone tax woes return

11 Dec 2014

India’s Income Tax Appellate Tribunal (ITAT) has ruled that it has jurisdiction to arbitrate an INR85 billion (USD1.368 billion) transfer pricing dispute between the Income Tax Department and Vodafone India, the Economic Times writes. The conflict revolves around the sale of Vodafone India’s call centre business to sister company Hutchison Whampoa Properties and an assignment of call options to Vodafone International in 2007-2008. According to the ITAT’s ruling, transfer pricing provisions apply to the transactions; however, the authority disagreed with the department’s valuation and has ordered it to revise the amount. As previously reported by CommsUpdate, India’s attorney general Mukul Rohatgi recommended tax authorities not pursue another claim against Vodafone India – also related to transfer pricing – after the Mumbai High Court ruled in favour of the UK-backed operator. India’s new government is attempting to shake off the country’s reputation for aggressively pursuing tax disputes, a policy often referred to as ‘tax terrorism.’ Indeed, Vodafone is involved in several disputes with India’s tax authorities, in addition to those mentioned above. Most notable of these is the cellco’s INR200 billion battle relating to its acquisition of Hutchison Whampoa’s stake in Hutchison Essar in 2007.

India, Vodafone India