Ink not even dry on official report examining if charge is legal
Vodafone’s protracted battle with the Indian government over alleged corruption and tax evasion has come to the boil again with a new, £1.6 billon bill sent to the British operator. In the latest episode of a six-year long row with India’s administration, the FTSE 100 operator has been formally asked to pay capital gains tax on its $11.1 billion acquisition of Hutchison Whampoa’s 67 per cent stake in what is now known as Vodafone India. This time last year India’s Supreme Court ruled in Vodafone’s favour, agreeing that tax was not due on the 2007 transaction as it took place between two overseas companies – Vodafone’s Dutch subsidiary, on the one hand, and Hutchison’s Cayman registered offshoot on the other.
But shortly afterwards the ruling was overturned by the Indian government’s retrospective tax amendment, specifically drafted to catch the Vodafone deal and others like it.
Now, before the amendment can be ratified by India’s finance ministry, the country’s tax authorities have made a pre-emptive strike by issuing Vodafone with a revised tax bill, higher than the $2.2 billion previously demanded due to the inclusion of interest dating back to 2007.
In the interim the nation’s tax officials want the matter heard afresh by a newer, enlarged judicial bench.
Vodafone has yet to respond, though it does have the option of taking the issue to arbitration.
Meanwhile Vodafone’s Indian offshoot remains caught in a corruption web amid claims that the country’s spectrum was awarded illegally under a former, Hindu-led government.
Police are also looking into separate rigging claims stemming from the 2008 sale of Indian bandwidth involving the current Congress government and in which Vodafone’s offices were raided by police as part of the probe.