British telecom major Vodafone today denied media reports that the company had hinted at paying tax for its 2007 deal with Hutchinson Essar.
Yesterday, media reports quoted Vodafone Essar CEO Marten Pieters saying the company would accept if there is a good compromise. A statement from the British parent company denied any such move.
“Vodafone Group’s position has not changed with regard to the tax case and we continue to believe that there is no tax to pay on this transaction. Every advisor we have consulted, both during the transaction and since, is in unanimous agreement that no tax liability should arise,” the company statement said.
The Indian revenue authorities have claimed a tax of as much as Rs 11,218 crore from Vodafone, as it acquired 67% stake in Hutchinson Essar. The revenue authorities claim they have to pay capital gains tax on this transaction as the assets, which were bought by the company, are based in India.
The company refuted these arguments saying the deal was done by foreign subsidiaries and the Income Tax department had no jurisdiction as the deals were done in tax havens.
Vodafone said the law was clear and India has not sought to tax such transactions before. “To do so would be contrary to international taxation principles, which are specifically designed to encourage foreign investment and eliminate barriers to trade. Vodafone will continue to defend its position vigorously and we look forward to the matter being reviewed in full by the Supreme Court on July 19,” the company said.