India tax office catches up with Vodafone

Sri Lankan News.Net
Wednesday 8th September, 2010

An Indian court has told phone company Vodafone to pay an estimated $2.6 billion in taxes for its 2007 acquisition of one of India’s largest mobile phone companies.

The Mumbai High Court has ruled Vodafone won’t have to pay the tax for at least eight weeks, while it considers an appeal to the Supreme Court.

The Indian Tax Department has been claiming the money, which it said it was entitled to under laws dealing with the indirect transfer of Indian assets which accrue revenue in India.

In May 2007, Vodafone International Holdings, a Dutch subsidiary of the British telecom giant, acquired a 67 percent stake in CGP Investments Ltd, which was based in the Cayman Islands to hold the India telecom assets of Hong Kong’s Hutchison Telecommunications International.

Vodafone had maintained that it did not owe tax on the $11 billion transaction because it took place between two foreign entities.

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