Vodafone hits back at India over tax proposal on deals

HomeNewsSupreme CourtVodafone hits back at India over tax proposal on dealsPrint 'Vodafone hits back at India over tax proposal on deals'Print4/17/2012

London, London [United Kingdom]

Vodafone Group PLC on Tuesday hit back at the Indian government's proposal to impose a heavy retroactive tax on some international mergers...

Vodafone Group PLC on Tuesday hit back at the Indian government's proposal to impose a heavy retroactive tax on some international mergers, which the UK-based mobile giant says violates legal protections granted under the international Bilateral Investment Treaty.

Vodafone, through its Dutch subsidiary Vodafone International Holdings BV, Tuesday served the Indian government with a so-called 'notice of dispute' regarding proposals in the Indian Finance Bill 2012, which the operator claims violates protections granted to them and other international investors in India.

It is the first step required prior to the commencement of international arbitration under the Bilateral Investment Treaty between India and the Netherlands, Vodafone said.

Last month, the Indian government proposed legislation that would allow it to tax any overseas merger dating back to 1962 in which an Indian asset was transferred. The unexpected move would override a ruling in January by India's Supreme Court that Vodafone didn't have to pay more than USD 2 billion in taxes on the deal to acquire a controlling stake in an Indian cellphone company from Hong Kong's Hutchison Whampoa Ltd.

The deal was between Vodafone's Dutch subsidiary and a Cayman Islands-based company that held Hutchison Whampoa's India assets. The Supreme Court agreed with Vodafone that the deal wasn't subject to capital-gains taxes, offering a glimmer of hope for international companies frustrated with India's investment environment. The proposed tax-law amendment would reverse its effect.

Vodafone said it has asked the Indian government "to abandon or suitably to amend the retrospective aspects of the proposed legislation as Vodafone would prefer to reach an amicable solution to this matter." However, if the Indian government isn't willing to do so, Vodafone will take "whatever steps are necessary to protect its shareholders' interests, including commencing investment treaty arbitration proceedings", under the BIT against the Indian government.

"Vodafone believes that the retrospective tax proposals amount to a denial of justice and a breach of the Indian government's obligations under the BIT to accord fair and equitable treatment to investors," the company said.

 

Related Tags Vodafone Group PLC, Indian Government, Heavy Retroactive Tax, UK-based Mobile Giant, Violates Legal Protection, International Bilateral Investment Treaty, Vodafone International Holdings BV, Indian Finance Bill 2012, Bilateral Investment Treaty, Supreme Court, Vodafone, Hutchison Whampoa Ltd

 

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