Vodafone loses tax appeal in India

8th September 2010, Comments 0 comments

British mobile phone giant Vodafone lost a legal appeal Wednesday against an Indian tax bill estimated to be 2.0 billion dollars relating to the group's 2007 purchase of local group Hutchison Essar.

The Bombay High Court dismissed an appeal by Vodafone against an earlier ruling which backed the local tax department in its bid to levy Vodafone over the 11.1-billion-dollar acquisition of a majority stake in Hutchison Essar.

"The case is dismissed," one of the judges said in a ruling.

Vodafone has not said how much tax the authorities are seeking, but it is estimated to be more than two billion dollars.

Lawyers for Vodafone said they would appeal against the decision in India's Supreme Court.

"We will be evaluating this long and detailed order with our advisors... We continue to believe strongly that this transaction is not taxable in India and will continue to defend our position," Desmond Webb of the Vodaphone Group told reporters.

India's tax officials have argued that the deal was liable for capital gains tax that Vodafone should have paid to the Indian government for the purchase of of the stake from Hong Kong's Hutchison Whampoa.

Vodafone has said Indian law did not require it to deduct tax because it bought the stake from CPG Ltd. in a deal that took place in the Cayman Islands.

CPG is owned by Hutchison Telecommunications International Ltd.

The ruling could have repercussions for other acquisitions of Indian assets by foreign firms and some analysts have the case could discourage multinationals pursuing other major deals.

Another British company, the brewer SABMiller, is embroiled in a tax dispute with India over its 2006 acquisition of Foster's Indian beer business, which Indian authorities also claim should be taxable in India.

-- Dow Jones Newsires contributed to this report --

© 2010 AFP

0 Comments To This Article