Vodafone not liable for $4.4b India tax bill
Ruling removes significant uncertainty for foreign companies investing in the country
Mumbai: British telecom company Vodafone is not liable for up to $4.4 billion (Dh16 billion) in back taxes and penalties, India's top court said on Friday, in a ruling that removes significant uncertainty for foreign companies investing in the country.
The decision will come as a relief to international investors who feared the Vodafone precedent would expose them to new tax liabilities.
"The Supreme Court has come with a thumping judgment," Vodafone lawyer Harish Salve told reporters.
Analysts say at least eight other companies are facing similar litigation, as India steps up tax collection efforts to help plug a growing fiscal deficit.
The dispute centred on Vodafone's $11 billion acquisition of the Indian telecom assets of Hong Kong's Hutchison Telecommunications in 2007.
In May 2007, Vodafone International Holdings BV — a Dutch subsidiary of the British telecom company — acquired a 67 per cent stake in CGP Investments Ltd, a Cayman Islands company which held the Indian telecom assets of Hutchison.
Vodafone says it doesn't owe tax on the deal because it took place between two foreign entities.
GE, SAB Miller, Cadbury, AT&T, Sanofi, and Vedanta are among the companies fighting tax cases in India.
