Vodafone's tax battle in India escalates

Dylan Bushell-Embling
telecomasia.net

Vodafone's tax battles in India have been exacerbated, with the nation's Income Tax Appellate Tribunal ruling that it has jurisdiction to hear a case related to an 85 billion rupee ($1.36 billion) transfer pricing dispute.

The tribunal has determined to arbitrate the dispute, but has sent the case back to tax officials to decide on the revised taxable amount before doing so, the Economic Times reported.

Tax officials' estimates for the valuation of the transaction have also not been accepted.

With the decision, the Tribunal has ruled that the sale of Vodafone India's call centre business to Hutchison Whampoa Properties and an issue of call options to parent Vodafone International were considered an international transaction.

This means that India's regulations on transfer pricing apply to the case, according to the Tribunal's decision.

Vodafone's tax dispute with India over the transaction dates back to 2012.

The operator has threatened international arbitration over its tax battles in the market, and has complained that the  uncertainties posed by inconsistent tax and other regulations are making it difficult for foreign firms to do business in India.

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