Vodafone considering $2.2B tax provision in India

U.K. operator is mulling over plans to set aside US$2.2 billion for taxes in India, a move to guard against legal implications after the country amended its tax law which make companies potentially liable for payment.
Written by Ellyne Phneah, Contributor

Vodafone Group, which has resisted setting aside capital for a US$2.2 billion tax bill in India, is considering doing so to mitigate potential legal risks.

The company's CFO Andy Halford told The Times of India in a Tuesday report the operator is consulting on the need for the provision after the Indian government amended its tax law which could make companies potentially liable for the payment.

"The situation has changed and we are looking at it," Halford told the Indian news site, noting that the company's assessment "is now being applied differently against a recently introduced, albeit retrospective, legislation". A decision will be made by November this year, he added.

The U.K. operator in January had deflected the Indian government's demand for taxes via the country's top court, stemming from its acquisition of Hutchison Whampoa's Indian operations. In March, the government unveiled an amendment to the law to retrospectively tax cross-border transactions dating back to1962.

The Asian economic giant in May was looking to extract US$3.75 billion from Vodafone should the law to retroactively tax overseas mergers which involved India-based assets be passed. Vodafone, however, said it was studying the legislation and would take steps to safeguard shareholder interests. The operator stated the law would violate the company's rights under an investment treaty between Netherlands and India.

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