Vodafone faces Rs 14,000 crore tax demand from Indian tax authorities

Telecom Lead Asia: Indian mobile operator Vodafone is facing Rs 14,000 crore tax demand from tax authorities.

The Indian tax authorities have revived a Rs 14,000-crore tax demand on Vodafone, seven months after the government approved a retrospective amendment seeking to tax overseas deals in which local assets changed hands, Economic Times reported.

READ MORE: Vodafone plc’s $2.2 billion plus ongoing tax tussle in India has divulged the keenness of the Indian government to tax corporates when they opt for M&A routes to enter India.

The report added that Vodafone could initiate arbitration before international tribunals under the India-Netherlands Bilateral Investment Protection Agreement.

Last year, Vodafone served a ‘dispute notice’ on the Center – the first step before starting international arbitration – requesting the government to abandon the retrospective aspects of the proposed legislation. But the government had then described the notice as premature.

Vodafone confirms it has received a reminder from tax authorities that the original tax demand remains due from the Hutchison Whampoa/Vodafone transaction in 2007.

The reminder does not include a deadline for payment.

“Vodafone has replied to this reminder, stating it continues to believe that no tax is payable on the above transaction,” said the spokesperson.

The reminder asks Vodafone to pay Rs 14,000 crore, which includes interest on delayed payment.

The tax demand was originally raised after Vodafone bought Hutchison’s stake in its mobile telephony venture with Essar in 2007 through sale of a holding company registered in the Cayman Islands.

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