Corporate Taxation

vodafone says it has responded in timely manner

NEW DELHI: During the amidst of the tax dispute of the UK telecom giant, Vodafone has countered the government’s assertion of a breakdown in talks regarding the tax dispute. Vodafone says the capital gains from the Hutchison transaction and a separate transfer pricing notice relate to the same deal and should also be considered during the conciliation proceedings.

“The Vodafone India Services (VISPL) transfer pricing dispute on the alleged options transfer is entirely included within the dispute about tax on the Hutchison Essar sale,” Vodafone said in a statement.

The UK telecom company also said that it responded in time to all government communication on the conciliation process initiated to resolve the Rs 20,000 crore capital gains tax case arising from its purchase of a stake in Hutchison Essar.

The statement of the telecom company came a day after Finance Minister P Chidambaram told Press trust of India in an interview that Vodafone has not been able to make up its mind on whether to go forward with conciliation and it is up to the revenue department to enforce the tax notice on it.

Conciliation talks had broken down after Vodafone International Holdings BV issued a supplementary notice to the government, invoking the Bilateral Investment Promotion and Protection Agreement, and demanded that the transfer-pricing case be clubbed with the capital gains tax matter.

“Throughout, Vodafone has responded to the government’s queries in a timely manner, notwithstanding, at one point, a six-month delay by the Indian government in responding to correspondence sent by Vodafone,” the statement said.

The basic tax demand for the acquisition OF VODAFONE essar is Rs 7,990 crore, outstanding dues, including a penalty of a similar amount and accrued interest, run into ₹ 20,000 crores which is ex exorbitant amount.

The I-T department slapped a tax liability of Rs 3,700 crore in the share transfer case from its subsidiary VISPL.

“From the outset of the discussions, Vodafone has made it clear that any negotiated resolution would need to encompass all aspects of the Hutchison Essar sale considered by the Supreme Court in reaching its verdict in 2012,”

Now its interesting to see how the government and the vodafone conciliation proceedings turn out to be.
Many MNCs should be keen to devise their decisions on whether on not to invest in India depending upon the vodafone tax dispute outcome.

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