Vodafone tax arbitration hearing scheduled for February 2019

15 Nov 2017

Vodafone India’s decade-long tax battle with the Indian government is scheduled to go to trial at an international arbitration tribunal in February 2019, the Economic times writes, citing a statement from the company’s British parent group. New Delhi claims that it is owed billions of dollars in taxes, interest and penalties from Vodafone Group’s 2007 acquisition of a 67% stake in the cellco – the amount sought by the government has varied from demand to demand, ranging from INR79.9 billion (USD1.2 billion), to INR221 billion.

In 2012 the Supreme Court had sided with Vodafone, ruling that the acquisition was not taxable in India. Later the same year, however, the government implemented the Finance Act 2012, changing the law to enable it to tax the transaction retrospectively. In 2014, Vodafone challenged the fresh demand under a Dutch-Indian bilateral investment treaty (BIT), as the purchase had been carried out via a Netherlands-based subsidiary, Vodafone International Holdings BV (VIHBV). For its part, India has raised objections to the application of the treaty to Vodafone’s claims, and disputes the jurisdiction of the tribunal under the BIT. The February 2019 hearing is set to assess the government’s jurisdictional objections, as well as VIHBV’s claim. Whilst awaiting international arbitration, however, India’s tax authorities have continued to issue tax demands to the operator, threatening in early 2016 to confiscate the provider’s assets if the sum is not paid.

India, Vodafone Group, Vodafone India