Fiscal crunch: Vodafone gets reminder on $2 bn tax dues

British telecommunications carrier Vodafone Group said on Saturday it has received a reminder from Indian tax authorities on disputed tax dues over its 2007 acquisition of Indian mobile assets.

Vodafone, the world’s biggest mobile operator by revenue, said in a statement the reminder does not include a deadline for payment.

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

[caption id=“attachment_578845” align=“alignleft” width=“380”] Govt can make retroactive tax claims on long-concluded corporate deals. AFP[/caption]

Britain-based Vodafone, the largest overseas corporate investor in India, has repeatedly clashed with Indian authorities over a string of tax and regulatory issues since it bought into the country in 2007.

A year ago, the Supreme Court ruled in favour of Vodafone in a five-year, $2 billion battle with Indian tax authorities arising from its acquisition of Hutchison Whampoa’s Indian mobile business.

The government later amended 50-year-old tax laws enabling it to make retroactive tax claims on long-concluded corporate deals.

Prime Minister Manmohan Singh set up a panel to review the changes after global business groups criticised the move. The panel has recommended that the law to tax deals retrospectively should be scrapped, but the government is yet to make a final decision.

Earlier on Saturday, the Economic Times reported that tax authorities had asked Vodafone to pay Rs 14,000 crore, including interest on the tax dues after an ‘informal dialogue’ failed to produce result.

“The ball is now in Vodafone’s court as the bilateral investment protection treaties are entirely investor-driven,” Economic Times quoted a government official as saying.

Last April, Vodafone threatened the Indian government with arbitration proceedings in its fight over the retrospective tax proposal.

Reuters