All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

India still hunting Vodafone over Hutchison acquisition withholding tax

vodafone-logosmall.jpg

The Indian tax authorities are still arguing that UK-headquartered telecommunications multinational Vodafone must pay a $2.5 billion tax bill in relation to its 2007 acquisition of Hutchison Essar, the company has revealed.

Vodafone has confirmed receipt of a reminder from the Indian tax authorities that the original tax demand remains due from the company’s Hutchison Whampoa transaction in 2007, despite the Supreme Court’s decision in favour of the taxpayer in January last year.

In its Finance Bill 2012, which became law last May, the Indian government introduced retrospective amendments to the tax law which would allow it to tax any gain on the transfer of shares in a non-Indian company, which derives substantial value from underlying Indian assets.

Following fierce criticism, the government commissioned a committee led by Parthasarathi Shome to assess the appropriateness of the retrospective amendments.

In its report, the committee recommended that that retrospective application of the tax law should only be used in exceptional or the rarest of rare cases.

The Indian authorities’ continued pursuit of Vodafone suggests they are either paying little heed to the Shome committee’s report or that they consider the Vodafone transaction to be an exceptional case, and neither conclusion bodes well for Indian taxpayers.

Read further analysis on ITR Premium here.

more across site & bottom lb ros

More from across our site

The UN may be set to assume a global role in tax policy that would rival the OECD, while automakers lobby the US to change its tax rules on Chinese materials.
Companies including Valentino and EveryMatrix say the early adoption of EU public CbCR rules could boost transparency of local and foreign MNEs, despite the short notice.
ITR invites tax firms, in-house teams, and tax professionals to make submissions for the 2023 ITR Tax Awards in Asia-Pacific, Europe Middle East & Africa, and the Americas.
Tax authorities and customs are failing multinationals by creating uncertainty with contradictory assessment and guidance, say in-house tax directors.
The CJEU said the General Court erred in law when it ruled that both companies benefitted from Italian state aid.
An OECD report reveals multinationals have continued to shift profits to low-tax jurisdictions, reinforcing the case for strong multilateral action in response.
The UK government announced plans to increase taxes on oil and gas profits, while the Irish government considers its next move on tax reform.
War and COVID have highlighted companies’ unpreparedness to deal with sudden geo-political changes, say TP specialists.
A source who has seen the draft law said it brings clarity on intangibles and other areas of TP including tax planning.
Tax consultants say companies must not ignore financial transactions in their TP policies as authorities, particularly in the UK, become more demanding.