Arbitration court rules against Vodafone tax demand

28 Sep 2020

An international arbitration tribunal at the Hague has rejected the Indian government’s imposition of an INR221 billion (USD3.0 billion) tax demand on the UK’s Vodafone Group, relating to the company’s entry to the Indian market through the acquisition of a controlling stake in cellco Hutchison Essar in 2007, the Economic Times writes. The ruling may draw a line under the decade-long dispute, but the Indian government is reportedly examining the order and may choose to appeal the decision. As noted by TeleGeography’s GlobalComms Database, following a defeat in India’s Supreme Court, the government amended legislation in 2012 to allow it to renew its demands for the tax retrospectively. Following this, Vodafone sought international arbitration on the matter. In its ruling, the tribunal reportedly accepted the UK-based firm’s claim that the Indian tax department was in breach of an India-Netherlands bilateral investment treaty, under which Vodafone is entitled to protection. According to sources with knowledge of the matter the court also ordered New Delhi to pay Vodafone GBP4.3 million (USD5.5 million) towards legal costs. Vodafone noted that the amount of the award is confidential, but highlighted that the court’s decision was unanimous, including the arbitrator appointed by the Indian government.

India, Vi (Vodafone Idea Limited, VIL), Vodafone Group