Telecom major Vodafone may take action against India on tax issue

Telecom Lead India:
Mobile service provider Vodafone Group Plc is considering a slew of actions after
India government decides to retrospectively tax overseas transactions involving
local assets.

“We are urgently considering a number of courses of
action, both in India and internationally, in consultation with our advisers
and we continue to discuss these issues with a wide range of stakeholders both
in India and internationally,” Vodafone said in a statement to Reuters.

The mobile service provider termed the government Budget
proposal grossly unjust. Vodafone did not comment on the possible actions it
would take regarding the proposal.

Finance minister Pranab Mukherjee announced a new proposal that would allow
authorities to back-date tax claims on overseas deals in his annual budget this

However, the finance minister later clarified that old cases
will not be taken up by the India government.

If the government takes up old cases, it will affect
Vodafone plc. Vodafone will be forced to take up the issue with the U.K. government.

Due to the recent 2G license cancellation, operators such as
MTS and Telenor have sought the help of their governments – Russia and Norway – to solve the issue in India.

Vodafone verdict in $2.2 billion tax case

Recently, Vodafone won the $2.2 billion tax case
against the income tax department. Supreme Court Chief Justice S.H. Kapadia
recently ruled that the tax department has no jurisdiction over Vodafone’s
purchase of mobile assets in India.

Business groups had hailed the court’s decision as bringing
clarity to the country’s investment climate, but the proposed amendment to
50-year-old-tax laws would allow India to open a new front against the company.

Telecom Budget 2012: Vodafone tax issue may be re-opened

Vodafone, in its statement, said that the proposed
amendments to the law have raised widespread and profound concerns in the minds
of international investors.