Vodafone offers India to settle multi-billion dollar tax dispute

British telecoms giant Vodafone said on Friday it had offered to settle a multi-billion dollar tax dispute with India after its government dropped a law demanding huge sums from foreign multinationals.

This 2012 law, which allows New Delhi to claim back taxes from foreign corporations that have acquired property from Indian companies, has been described as “ tax terrorism by the BJP party, then in opposition and now in power, as detrimental to efforts to attract more foreign investment. The Indian government then presented a proposal for a tax law in early August, which aimed to end the sometimes ten-year-long legal proceedings against foreign companies that had threatened to confiscate Indian goods and properties abroad.

International arbitration courts have upheld the lawsuits, although New Delhi has refused to accept their rulings, with a French court even placing about 20 Indian government properties in France under receivership in July at the request of Scottish oil company Cairn Energy. More than fifteen companies are locked in a legal battle with India, analysts estimated in August totaling more than $6 billion, which has even become a point of diplomatic tension with several countries.

$2.7 billion in back taxes from Vodafone

After the 2012 law was finally repealed, they expect India to return the taxes levied if the companies involved agree to end the litigation and not sue for damages. In a press release to AFP, Vodafone confirmed that it had filed a request to settle the dispute. The dispute arose from the British giant’s acquisition of one of India’s largest mobile operators, Hutchinson Essar, in a 2007 deal.

We have always believed that no tax liability arose from our acquisition of the Indian business and this has been confirmed by decisions of the Supreme Court of India and the International Court of Arbitrationsaid a Vodafone spokesman. New Delhi had demanded about 200 billion rupees ($2.7 billion) in back taxes from Vodafone, Bloomberg reported in August.

About 447 million rupees ($5.9 million) that the Indian government has received from Vodafone so far should be reimbursed, the newspaper estimated on Friday.The economy timeEach of the 17 companies affected by the retroactive tax law have applied for refunds, the same source added. Cairn Energy announced in early November that it was ending its tax dispute with India to recover Rs 79 billion ($1.06 billion) to allow.

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