Telecom Lead India: To solve the $2.2 billion tax issue,
Vodafone group CEO Vittorio Colao has met Indian finance minister Pranab
Mukherjee.
Vodafone is seeking reconsideration of the move to
retrospectively amend laws that will have a tax implication of Rs 11,000 crore
on the mobile firm.
“Vodafone made a presentation of their case,”
Mukherjee said
“We just presented our case to the finance
minister,” Colao said. He declined to elaborate further.
During Budget 2012-13, the finance minister proposed to
amend the Income Tax Act, 1961 with retrospective effect to bring into tax net
overseas mergers and acquisitions involving domestic assets.
The proposed amendment is introduced in the Finance Bill,
which is expected to come up for discussion and passage in Parliament next
week.
Earlier, the Supreme Court had ruled that Vodafone wasn’t
liable for taxes stemming from its USD 11.2 billion acquisition of Hutchison’s
stake in Hutchison-Essar in 2007.
Recently, the Dutch unit of Vodafone served a legal
notice to the government threatening to drag India to international arbitration
on the issue.
Vodafone sent the notice to Prime Minister’s Office, with
copies marked to Mukherjee, Law Minister Salman Khurshid and Telecom Minister
Kapil Sibal, claiming the proposed law violated the international legal protections
granted to Vodafone and other international investors in India.
Vodafone has served the notice of dispute invoking an
investment treaty between India and the Netherlands in connection with tax
liability.
Vodafone tax issue: revenue department had alerted in 2007
R S Gujral, finance secretary, said the revenue
department had alerted both Vodafone and Hutch in March 2007 that the proposed
transaction was prima-facie liable to tax and Vodafone should withhold tax
before remitting money.
This statement from the finance secretary has the
potential to further damage Vodafone’s business in India. Vodafone is looking
at getting out of the ongoing $2.2 billion tax dispute case.
The Indian finance ministry also stated that similar
transactions are taxed in USA, UK and other European nations.
