India slaps Vodafone with 2.53-billion-dollar tax demand

22nd October 2010, Comments 0 comments

India slapped a 2.53-billion-dollar tax bill on British cell phone giant Vodafone on Friday over its purchase of an Indian mobile company and demanded payment within 30 days.

"The income tax department today issued an order raising a tax demand of 112.17 billion rupees (2.53 billion dollars) on Vodafone International Holdings BV," owned by Vodafone Group Plc, the tax office said in a statement.

The formal demand follows a lower court ruling last month ordering the company to pay taxes on its 11.1-billion-dollar acquisition in 2007 of a majority stake in Hutchison Whampoa's Indian mobile phone unit.

"The tax demand is to be paid within 30 days of the receipt of the notice of demand," the statement said.

India's Supreme Court is due to set a date for a hearing on the company's appeal next Monday.

Vodafone has insisted the transaction is not subject to tax in India and that as the acquiring company it is not obliged to pay capital gains.

The case is being closely watched as experts say it could have implications for purchases of Indian firms by other foreign companies, which might be deterred by the possibility of large tax liabilities.

© 2010 AFP

0 Comments To This Article