Indian govt issues Hutchison tax demand for USD5bn

30 Aug 2017

India’s tax authorities have opened a new front in their long-standing legal battle over the 2007 sale of a majority stake in wireless provider Vodafone India, issuing Hong Kong-based CK Hutchison Holdings a demand for INR323 billion (USD5 billion) in unpaid capital gains tax, the Economic Times writes. The figure includes the unpaid tax of INR79 billion, a penalty of INR79 billion, plus interest of INR164 billion relating to the sale of its 67% stake in the cellco, then known as Hutchison Essar, to the UK’s Vodafone Group. In a statement, Hutchison rejected the demand, stating that the order was ‘in violation of principles of international law’ as it is based on the retrospective legislation to overturn a January 2012 ruling from the Supreme Court of India.

Until January this year, the Indian authorities’ efforts had focused on pursuing Vodafone rather than Hutchison, claiming that the British group owes around USD2 billion in relation to the sale. In January 2012 the Supreme Court ruled that the telco was not liable to pay any taxes over the acquisition, but in May that year the tax laws were amended with retrospective effect and the Indian government re-issued its demand. In 2014 Vodafone filed for arbitration, and the procedure is currently ongoing.

Hong Kong, India, CK Hutchison, Hutchison Telecommunications International Ltd (HTIL), Vodafone India