‘Vodafone can’t invoke BIPA on tax demand’

After taking a tough stance on taxing telecom major Vodafone for its acquisition of a majority stake in Hutch Essar

Written by ENS Economic Bureau | New Delhi | Published: May 12, 2012 2:50 am

After taking a tough stance on taxing telecom major Vodafone for its acquisition of a majority stake in Hutch Essar,the government on Friday said that the British telecom firm could not invoke the Bilateral Investment Protection Agreement (BIPA) on the issue.

“Taxation does not come under BIPA. Money for the deal came from over 20 companies (which are subsidiaries of Vodafone) … We will meet next week again,” an official said after a meeting of the Inter-Ministerial Group (IMG) that was constituted to respond to the arbitration notice of Vodafone.

The panel is headed by finance secretary RS Gujral and includes representatives of ministries of external affairs,telecom,law and revenue. The official said that Friday’s meeting was merely a preliminary discussion where BIPA provisions were read out.

The Dutch subsidiary of UK-based telecom major Vodafone had,last month,served a notice on the Indian government invoking Bilateral Investment Protection Agreement between India and The Netherlands and threatened international arbitration in the tax case.

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