Terming the move to tax cross-border deals with retrospective effect as “grossly unjust”,UK-based telecom giant Vodafone today said it is considering various courses of action to safeguard its position in India.
While Vodafone did not give details of possible recourse it may take,it is being speculated that the Group,which may have to pay Rs 11,000 crore in taxes on a 2007 acquisition if the Parliament passes the law change,could invoke the terms of an India-Netherlands treaty to get compensation.
The government proposes to amend the Income Tax Act with retrospective effect to override a Supreme Court ruling that held Vodafone wasn’t liable to pay tax on its USD 11.2 billion acquisition of 67 per cent stake in Hutch Essar from Hong Kong-based Hutchison Telecom,as the deal was done between two foreign entities overseas.
“We can confirm that we are urgently considering a number of courses of action,both in India and internationally,in consultation with our advisers and we continue to discuss these issues with a wide range of stakeholders both in India and internationally,” Vodafone Group said in a statement.
It,however,did not give details.
The bilateral pact between India and the Netherlands allows companies to claim back taxes in case they are forced to pay.