New Delhi: France waived taxes worth €143.7 million (Dh596 million) to a French-registered telecom subsidiary of Anil Ambani’s Reliance Communications in 2015, months after India’s announcement of plans to buy 36 Rafale jets, leading French newspaper Le Monde reported on Saturday.
In its reaction, Reliance Communications rejected any wrongdoing and said the tax dispute was settled under legal framework which is available for all companies operating in France.
The French newspaper said the French tax authorities accepted €7.3 million Reliance Flag Atlantic France as a colony as against original demand of €151 million. Reliance Flag owns a terrestrial cable network and other telecom infrastructure in France.
Prime Minister Narendra Modi had announced the procurement of a batch of 36 Rafale jets after talks with the then French President Francois Hollande on April 10, 2015 in Paris. The final deal was sealed on September 23, 2016.
The Congress has been alleging massive irregularities in the deal, saying the government was procuring each aircraft at a cost of over Rs16.70 billion as against Rs5.26 billion finalised by the UPA government when it was negotiating the deal.
The Congress has also been targeting the government over selection of Anil Ambani-owned Reliance Defence as an offset partner for Dassault Aviation, the manufacturer of Rafale. The government has rejected the allegations.
The French newspaper said the company was investigated by French tax authorities and found liable to pay €60 million in taxes for the period 2007 to 2010.
However, Reliance offered to pay €7.6 million only as a colony but it was French tax authorities refused to accept the amount. The authorities conducted another probe for the period 2010 to 2012 and asked the company to pay an additional €91 million in taxes, the report said.
It said by April 2015, the total amount owed by Reliance to the French authorities in taxes was at least €151 million.
In October, six months after Modi announced in Paris about the Rafale deal, the French authorities accepted €7.3 million from Reliance as a colony as against the original demand of €151 million.
A spokesperson of Reliance Communications said the tax demands were “completely unsustainable and illegal” and that the company denied any favouritism or gain from the colony.
“During the period under consideration by the French Tax Authorities — 2008-2012 i.e. nearly 10 years ago, Flag France had an operating loss of Rs200 million (€2.7 million). French tax authorities had raised a tax demand of over Rs1100 crore for the same period,” the official said.
“As per the French tax colony process as per law, a mutual colony agreement was signed to pay Rs560 million as a final colony,” he said.