Vodafone disowns CEO8217;s India tax byte

Distancing itself from its India CEO's comments that the Vodafone Group may accept a "good compromise" over the Indian government's tax demand...

Distancing itself from its India CEO8217;s comments that the Vodafone Group may accept a 8220;good compromise8221; over the Indian government8217;s tax demand for a whopping USD two billion,Vodafone head office today said that it would vigorously pursue the case in Indian court.

India8217;s Income Tax authorities have slapped a tax demand of about USD two billion on Vodafone8217;s over USD 11 billion deal to acquire Hutchison8217;s stake in Hutchison-Essar now Vodafone-Essar in 2007.

Vodafone India CEO Marten Pieters had hinted that the company may pay the tax to end the dispute with the authorities.

8220;8230;In the end we are businessmen,if there would be a good compromise we would probably,I guess,Vodafone group,would be willing to accept it,8221; Pieters had said.

But the Vodafone Group8217;s head office today issued a statement saying: 8220;Vodafone Group8217;s position has not changed with regard to the tax case and we continue to believe that there is no tax to pay on this transaction8230;.Vodafone will continue to defend its position vigorously and will look forward to the matter being reviewed in full by the Supreme Court on July 19.8221;

It said the USD 2 billion-tax demand by the Indian authorities was 8220;contrary to international taxation principles8221;.

8220;The law is clear and India has not sought to tax such transactions before. To do so would be contrary to international taxation principles,which are specifically designed to encourage foreign investment and eliminate barriers to trade,8221; the statement added.

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The company has already deposited Rs 2,500 in cash and a bank guarantee of Rs 8,500 crore following the orders of the Supreme Court.

Pieters had said that such a move of taxing the deal would have a backlash on Indian companies doing similar mergers and acquisitions overseas,because 8220;in retaliation,foreign governments may penalise them.8221;