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No obligation over Hutch deal, but still unclear about India’s stand: Vodafone

UK’s Vodafone Group has said it is likely that it has “no present obligation” as of September-end from India’s retrospective tax amendment in 2012, but is still unclear whether New Delhi will withdraw its challenge to an earlier arbitration award the telco had won.

“In August 2021, the Indian Parliament passed new tax legislation which affects the retrospective effect of the Finance Act 2012. The impact of this legislation on the Dutch and UK BIT proceedings, in particular whether the Indian government will withdraw its challenge to the arbitration award in the Dutch BIT, is unknown as of the date of this report,” Vodafone Group said in its half-yearly earnings report.

“VIHBV (Vodafone International Holdings BV) and Vodafone Group Plc will continue to vigorously defend any allegation that VIHBV or Vodafone India is liable to pay tax in connection with the transaction with HTIL (Hutchison Telecommunications International Limited group). Based on the facts and circumstances of this matter, including the outcome of legal proceedings to date, the Group considers that it is more likely than not that no present obligation exists on September 30, 2021,” the company said.

Experts said that the company’s statement indicated that it has yet to settle the long-standing tax dispute with the government, which had claimed Rs 22,000 crore from the telco for not withholding taxes on its 2007 deal to buy 67% in HTIL. As per India’s notification, the company has until end of November to accept the settlement proposal.

People close to the development said that the UK major has raised concerns around peripheral tax demands that emanated from the indirect transfer of shares, and the company wants more wriggle room for providing certain undertakings. “There have been a lot of undertakings that companies including Vodafone, are required to give if they wish to settle the legacy issues on the indirect transfer of shares and many companies may not be very comfortable with this. Also, companies want to settle all the tax issues that emanated from the indirect transfer of shares or retrospective tax and may not want to settle unless that happens,” said Dinesh Kanabar, CEO, Dhruva Advisors, a tax advisory firm.

India this year brought a bill to repeal the tax amendment passed in 2012. UR ALL News

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