The UK-based Vodafone Group Plc is confident that it would not have to shell out income tax in India for the Group’s $11.2-billion acquisition of local mobile operator Hutchison Essar Ltd in 2007. The Netherlands- based unit of Vodafone — Vodafone International Holdings BV had acquired a 67 per cent stake in Hutchison Essar, which has since been renamed as Vodafone Essar.
Indian income tax authorities had slapped a notice on VIH (through Vodafone Essar) for non-deduction of tax at source as the deal involved transfer of an Indian asset. The Bombay High Court is expected to hear on August 2 arguments over question of jurisdiction.
“We have confidence in the court process. India has a very solid legal system and we will just go on and on until our reasons are heard,” Mr Vittorio Colao, Chief Executive of Vodafone Group Plc, told reporters on Thursday.
The tax bill for Vodafone Group for the Hutchison Essar deal could be about $2.5 billion. The ruling on the Vodafone matter will have far-reaching implications on other transactions done abroad but involving underlying Indian assets.
Meanwhile, in a recent development, Vodafone has decided to settle its long pending tax dispute with UK authorities over its foreign earnings and agreed to shell out £1.25 billion over five years.