British telecommunications giant Vodafone said Friday it had offered to settle a multi-billion-dollar tax dispute with India, after the government scrapped a law that saw it claim huge sums from multinational firms. The legislation, introduced in 2012, allowed New Delhi to claim back taxes from foreign companies that had bought assets of Indian firms in past deals.
It was dubbed “tax terrorism” by the then-opposition BJP — which is now in power — and widely viewed as damaging India’s push to attract more foreign investment. Major firms including Vodafone and British oil producer Cairn Energy successfully challenged the tax claims in international arbitration tribunals, although New Delhi refused to accept the rulings.
It finally repealed the legislation in August, and it is expected to return the taxes it has collected if firms agree to withdraw their legal claims and not sue for damages. Vodafone confirmed in a statement emailed to AFP it had filed an application to settle the dispute.
“We have always been confident that no tax liability arose in respect of our acquisition of the Indian business, and this was borne out by the decisions of the Supreme Court of India and the International Court of Arbitration,” a spokesperson said.
The dispute arose from the British telecom giant’s acquisition of one of India’s largest mobile phone operators, Hutchinson Essar, in a 2007 deal. New Delhi had claimed some 200 billion rupees ($2.7 billion) in past taxes, according to a Bloomberg News report in August. Some 447 million rupees ($5.9 million) collected by the government from Vodafone so far was expected to be refunded, The Economic Times reported Friday. All 17 companies affected by the retrospective tax law have applied for refunds, the newspaper added.
Scottish-based Cairn Energy said in early November that it would end its tax dispute with India to allow for the refund of 79 billion rupees ($1.06 billion) collected from the firm.