The UK government today raised the tax imbroglio concerning telecom giant Vodafone Plc in India and said it was hopeful of an early resolution of the issue.
“Vodafone is one of the important companies in India. Its joint venture is rapidly growing and like other foreign investors, they need to have stability in tax regime. We have talked about it, but it is a matter for the courts in the first instance. We discussed this in a very amicable way. I think we look forward to a good outcome,” said Vince Cable, Britain’s secretary of state for business, innovation and skills, after a meeting Commerce and Industry Minister Anand Sharma today.
In 2007, Vodafone International Holdings of Vodafone Group bought 67 per cent stake in Hutchison Essar for $11 billion through a firm based in the Cayman Islands. However, according to the country’s income tax department, it has to pay Rs 11,200 crore as tax on the deal.
Vodafone had been reiterating that it did not need to pay the tax, as the deal was struck between two overseas companies and the Indian tax department has no jurisdiction over transactions. However, last November, the Supreme Court gave a verdict that the telecom major should pay the tax.
Earlier in the year, the British High Commissioner to India, Richard Stagg, had said Vodafone should not be made to pay the proposed Rs 11,000 crore tax from its deal with Hutchison Essar, as it had not made any capital gains. “Indian foreign direct investment policy regime is robust, stable and irreversible,”Sharma said.
