Vodafone's long-running Indian tax saga could finally be coming to an end after India signalled its willingness to hold talks with the operator on settling the disputed $2.2 billion (£1.36 billion) tax bill, according to a Bloomberg report, which cited an unnamed source.
Earlier this month, Vodafone received a formal "reminder" from the Indian government that it still owed the money in the form of tax and interest charges relating to the 2007 acquisition of Hutchison Whampoa's Indian assets. The move indicated that the matter had not been settled, as previously thought.
According to the report, an Indian Finance Ministry official speaking on condition of anonymity said the government has now replied to a letter from Vodafone seeking an amicable settlement. Another unnamed official indicated that the government may seek to waive interest and penalties on levies arising from changes to tax laws applied retroactively, as is the case with Vodafone.
Vodafone has said no tax is liable and has made no provision for the tax. Vodafone has "said all along" that it wants to reach an amicable settlement with the Indian government, Ben Padovan, a spokesman for the operator, told Bloomberg.
In January 2012, India's Supreme Court ruled in Vodafone's favour in the dispute, noting that the tax was not applicable because the deal took place between two foreign companies. Then in March 2012 the Indian government honed on using a retrospective tax amendment from 1962 to get the tax from Vodafone and in other similar deals.
Vodafone was one of two large European companies active in the mobile sector to be hit by Indian tax issues this week. After the mobile operator received its notice from the government Nokia's Chennai factory was raided over suspected tax evasion.
- see this Bloomberg article
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