BusinessCompany NewsIndian takeover lands Vodafone with $2bn tax bill

Indian takeover lands Vodafone with $2bn tax bill

Mobile giant faces $2bn (£989m) tax bill after $11.1bn takeover of Hutchison Essar

The deal that secured control of Hutchison Essar, India’s fourth largest
mobile group, has landed buyer Vodafone with a $2bn (£989m) tax demand.

The Times reports that Vodafone has received a letter from India’s
Income Tax Department asking for unpaid capital gains tax on the $11.1bn
Hutchison deal.

Vodafone confirmed receipt of the letter, but said it is confident that its
case is strong.

‘We have had clear legal and tax advice that no tax is payable either by
Vodafone Essar or any other member of the Vodafone group and will defend our
position vigorously,’ a spokesman was quoted as saying.

It is understood that under Indian law any transfer of property located in
the country attracts CGT of 22%. This tax normally falls on the seller, but in
the Hutchison Essar case there seems to be some confusion over which body closed
out the deal.

Further reading:

Commissioners duck Vodafone tax query

Vodafone faces investor demands for £38bn at
AGM

Mobile phone giants suffer £3.3bn VAT
loss

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