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Vodafone to Challenge Indian Tax Law Change
Updated:2008/6/23 11:05
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Vodafone is expected to seek to challenge a change to India's tax laws which have been applied retrospectively to its US$11.1 billion purchase of a controlling stake in Hutchison Essar. Vodafone said in a statement last Friday that it has submitted an amended writ petition challenging the "constitutionality of the retrospective amendment of the changed tax law". A legal hearing in the Bombay High Court is due to restart on Monday (23rd June) to decide on the legality of a US$2 billion tax bill based on the purchase of the Hutchison stake. If the tax department can show that the India based Vodafone-Essar acted as an "agent" of Vodafone in its overseas purchase (arranged via Mauritius) of Hutchison's shares in Hutchison-Essar, then it may be possible that Vodafone-Essar could be held liable for the tax demand. Last month, India's government passed a new law which allows it to take action against companies which do not withhold taxes when making a transaction - the core of the tax dispute between Vodafone and the government. Vodafone International Holdings BV, a company registered in the Netherlands, acquired the entire share capital of CGP Investments (Holdings) Ltd, a Cayman Islands based company from Hutchison International (HTIL). CGP, itself, owns 52 per cent stakes in Hutchison India. Vodafone Essar has argued that Vodafone Holdings , CGP Investments as well as HTIL are foreign companies and as the transaction was structured through Mauritius, capital gains cannot have been accumulated within India. Also India and Mauritius have a double taxation avoidance treaty, so it would not be possible for India to apply capital gains tax on transactions that are already taxed within Mauritius.
Source:cellular-news ,Vodafone pulls Google phone from NZ market (2009-7-2) ,Vodafone launches wireless broadband trial (2009-7-2) ,Vodafone lies low on T-Mobile UK interest (2009-7-1) ,Vodafone to launch commercial femtocell service (2009-6-25) ,Vodafone extends MySpace relationship (2009-6-23) ,Vodafone and Hutchison complete merger (2009-6-11) ,Vodafone, Nokia and RIM bosses meet at OMS in London to talk App Stores (2009-5-22) ,Vodafone May Seek African Acquisitions Using Vodacom as Gateway (2009-5-21) ,Vodafone boss confirms HanseNet bid (2009-5-21) ,Vodafone `quick-fix¨ plan to deliver broadband to rural Ireland (2009-5-21) ,Vodafone accelerates cost cutting programme (2009-5-20) ,Vodafone to speed up cost cuts (2009-5-18) ,Vodafone to Introduce Mobile Application Store This Year (2009-5-13) ,Vodafone to invest USD700m in Ghana (2009-5-12) ,Ericsson: Telecom and Vodafone¨s networks can get along (2009-5-5) ,Vodafone officially launched in Ghana (2009-4-17) ,Vodafone given more time to launch new network (2009-4-7) |
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