openPR Logo
Press release

Vodafone Serves Notice of Dispute against Indian Tax Law

05-21-2012 07:10 PM CET | Business, Economy, Finances, Banking & Insurance

Press release from: Nair & Co.

Vodafone Serves Notice of Dispute against Indian Tax Law

(Sunnyvale, CA) – India’s plans to introduce amendments to its tax laws that include powers to retroactively overturn recent court rulings has sparked off a new contention between the government and Vodafone with the telecommunication company challenging the new retrospective tax legislation.

Vodafone has served a Notice of Dispute against controversial proposals included in the Indian Finance Bill 2012 which allows the government to change tax laws retroactively as well as the power to reverse Supreme Court rulings and judgements.

In a landmark case in January 2012, the Supreme Court ruled that the Indian tax authorities have no jurisdiction to tax Vodafone’s $11.2 billion acquisition of the Indian cellphone company from Hong Kong's Hutchison Whampoa Ltd because it was structured as a transaction between two foreign entities. The Supreme Court further asked the Indian tax department to refund the 25 billion rupees ($500 million) that Vodafone had deposited, along with 4% interest.

In the Vodafone case, the deal, struck in 2007, was structured as a transaction between Vodafone’s Dutch subsidiary and a Cayman Islands-registered subsidiary of Hutchison Telecommunications International Ltd (HTIL) as the purchaser of the 67% stake in India based Hutchison Essar. India’s Supreme Court ruled that the deal is not subject to capital gains tax, which means that Vodafone had no reason to withhold tax. The court disregarded the fact that the main asset changing hands was a controlling interest in an Indian telecom company.

Amendment to India Finance Bill
With an aim to prevent such foreign transactions which are commonly undertaken for foreign investment in India, the Finance Bill states that “an asset or a capital asset being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be and shall always be deemed to have been situated in India if the share or interest derives, directly or indirectly, its value substantially from the assets located in India”.

Fearing that this provision in the Finance Bill will overturn the Supreme Court's verdict, the Dutch subsidiary has issued a Notice of Dispute which could involve international arbitration proceedings as per Netherlands' Bilateral Investment Treaty (BIT) with India.

Vodafone International Holdings BV being a Netherlands subsidiary qualifies as an investor according to the treaty principles. Vodafone is arguing that the Indian government is in breach of the treaty’s principles which includes fair and equitable treatment to investors. Therefore, it is urging the Indian government to abandon or suitably amend the retrospective aspects of the proposed legislation. However, if the government did not oblige, the company said it would initiate investment treaty arbitration proceedings under the BIT.

Proposed Amendments to Tax Evasion Laws
In light of this development, the Indian government recently announced amendments to the Finance Bill specifically to the retrospective measure of the tax evasion law. It clarifies that the retrospective amendments which are under consideration of the Parliament of India won’t be used to reopen cases where assessment orders have already been done. Also, the benefits will not be applicable to Vodafone like cases which involve low tax and non-DTAA destinations like Cayman Island. The amendment also clarifies that the tax evasion law will be applicable only to specific cases where a transfer is facilitated through a low tax or no tax jurisdiction which does not have a Double Taxation Avoidance Agreement (DTAA) with India.

Please call/email for more details.
Get the latest press releases and updates on international tax, HR, Finance, compliance and other legal news at Nair & Co. Industry Alerts.

Nair & Co.
1250 Oakmead Parkway, Suite 210
Sunnyvale, CA 94085, U.S.
+1 408.515.6887
Nandita Verma

This release was published on openPR.

Permanent link to this press release:

Please set a link in the press area of your homepage to this press release on openPR. openPR disclaims liability for any content contained in this release.

You can edit or delete your press release Vodafone Serves Notice of Dispute against Indian Tax Law here

News-ID: 221710 • Views: 966

More Releases from Nair & Co.

Luxembourg Implements New Tax Provisions
Luxembourg has implemented various measures with the aim of increasing revenue through taxation. Most of the provisions come into effect from January 1, 2013. The details of the important tax measures are summarized below: For Corporate doing business in Luxembourg: • The surcharge for employment fund has been hiked by two percentage points from 5% to 7%. This would result in an increase in the total tax for the City of Luxembourg, from
Czech Republic Approves Austerity Measures and Amends VAT Laws
Details of the major VAT changes effective from January 1, 2013 are as follows: • The standard VAT rate has been increased to 21% and the reduced VAT rate to 15%. • The scope for VAT has been widened, making more customers liable to pay in future. • The VAT exemption for insurance and re-insurance has been amended. • The electronic format rules concerning tax documents have been changed. • VAT returns will have to be filed electronically from 2014. • Calendar
Australia Strengthens Data Privacy Laws
Australia Amends Privacy Laws: Key changes The current dual system of Information Privacy Principles and National Privacy Principles applicable to the public sector and private businesses respectively, will be replaced with the new unified Australian Privacy Principles (APPs). Companies will be required to maintain an active privacy policy and also make sure it is complied-with on an ongoing basis. Businesses may be required to disclose personal information of overseas recipients in certain cases,
France Proposes Changes to Tax Laws for Stock Options
The proposed changes, if implemented, would be applicable to qualified stock options and free shares awarded on or after September 28, 2012. The awards made prior to this date, however, will stay under the existing tax system. Other proposed changes include the new 18 % rate of tax on income which will be applicable on income derived since January 1, 2012, and certain other changes like progressive taxation on capital

All 5 Releases

More Releases for India

Medical Tour India | Affordable Treatment In India
We at MedCredible look after the well being of the patients seeking treatment in India. Our support staff support is well trained in handling various situations arising due to cross border differences. All the patients can avail of high-quality treatment at an extremely affordable cost in a compassionate environment combined with ethical practices. With options of over 100 + Hospitals and Institutions, we at Medcredible ensure that we connect the
01-17-2011 | Health & Medicine
IVF India, Test Tube baby India
The aim of setting up KJIVF is to help infertile couples in achieving conception through modern diagnostic and treatment methods. KJIVF Centre has given the best results by blessing infertile couples of advanced age with children, these couples could never dream of becoming parents. Thousands of babies are conceived through in-vitro fertilization (IVF) each year; In-Vitro Fertilization (IVF) means fertilization outside the body. A baby developed from an egg that
Beach Holiday India- Best Beaches in India
The natural beauty, exotic locations and rich heritage has helped India to stand as the most visited and most popular tourist spot in the world. The status of “Incredible India”, is defined by an incredible range of nature’s blessings on the Indian subcontinent and this incredibility is doubled by one of the most fabulous tourism option available in the country that are the brilliant and majestic beaches in India.
ISO 27001 India, 27001 training India ISO
Coral eSecure is information Risk Management advisory with specific focus on Information Security (ISO 27001, ISO 17799, PCI, COBIT, HIPAA, GLBA, and DPA), Business Continuity (BS25999) and ITIL/ IT Service Management (ISO 20000). Coral is the FIRST Indian consulting organization which provides an Integrated Management System Consulting, Consisting of ISO 27001, ISO 20000 and BS25999 – ALL THREE IN ONE! Coral provides Consulting, Assurance audit and Training to address these
Interior Designers India, Designers and Architects India
Today, we have recognized ourselves as a booming beauty interior designing firm, offering services that include interior designing. We are a winning firm, which is based on the strong foundation of innovative and original ideas for interior, architectural and landscaping designing services. Synergy Corporate Interior Design Association has more corporate members. Who provide Products and services. We support Interior Designers India, Designers and Architects India. We are committed to the
Domain Registration India, Web Hosting India, Payment Gateway India is a Quality Web Hosting Company India, provide all web related support and Web hosting services like linux web hosting, windows web hosting, web hosting packages, domain registration in india, Corporate email solution, business email hosting, payment gateway integration, SSL with supports like free php, cgi, asp, free msaccess, free cdonts, free webmail, web based control panel, unlimited ftp access, unlimited data transfer. During the domain registration process, you will