India moves to end Vodafone tax fight: report

14th May 2013, Comments 0 comments

India has begun moves to work out an out-of-court settlement with British mobile giant Vodafone over a multi-billion-dollar tax bill, a report said Tuesday.

The government has been pursuing Vodafone over what it says are unpaid taxes stemming from its 2007 takeover of Hong Kong-based Hutchison Whampoa's Indian cellular unit.

The tax battle has contributed to a souring of overseas investor sentiment toward Asia's third-largest economy.

The Press Trust of India, quoting unnamed government officials, said the government had initiated moves for a "conciliatory out-of-court settlement" with Vodafone.

The news agency said new law minister Kapil Sibal, named to the portfolio at the weekend, initiated the settlement move, reversing a stand by his predecessor who resigned last Friday over a corruption scandal.

Sibal told reporters Monday he would work to ensure that "legal processes and procedures should not be an impediment to economic growth, but must fuel it".

India is keen to draw more foreign investment to spur an economy that has been growing at a decade low of five percent.

Last year, lawmakers passed legislation giving the left-leaning Congress government the right to tax merger transactions retroactively.

The measure was seen as aimed at overriding a Supreme Court ruling dismissing what was then a $2.2-billion tax claim on Vodafone.

The government said later it might pursue Vodafone for $3.72 billion in back taxes, interest and penalties, spooking foreign investors.

There was no immediate comment available from Vodafone or the government on the report.

The dismay over the tax legislation added to investors' unhappiness about economic policy paralysis and a slew of graft scandals besetting the government of Prime Minister Manmohan Singh.

© 2013 AFP

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