India asks Vodafone to re-submit tax return
Vodafone’s long-standing tax woes in India have hit another hurdle after the country’s income tax department asked the operator to re-file its 2009-10 tax return for re-assessment.
An inside source told the Economic Times he didn’t know what triggered the request, but the tax authority is looking to review the amount of income it argues “escaped assessment” and it seeks to tax.
Vodafone has 30 days to respond to the request, and after the re-assessment will be able to ask the tax authority for the reason why it has demanded additional tax.
The country’s second largest operator has been locked in multiple tax disputes with the Indian government since it acquired a Hutchison unit in 2007. Vodafone is seeking arbitration to resolve an INR200 billion ($3.2 billion) tax claim over the Hutchison-Vodafone deal.
Last December a tribunal arbitrating a transfer-pricing dispute ruled that the tax authorities have the power to demand the operator pay INR85 billion in tax. The case involved the sale of its call-centre business.
In October the company’s tax problems took a turn for the better when it won a favourable ruling from the Bombay High Court in an INR30 billion tax dispute over transfer pricing.
The Times, quoting Finance Minister Arun Jaitley, said: “I am acutely aware that there are concerns about retrospective taxation, tax harassment, unpredictability and arbitrariness on tax administration, especially relating to transfer pricing. Let me emphasise that we are committed to a transparent and predictable tax regime.”
The country’s tax authorities have come under harsh criticism in the recent years, with complaints over burdensome red tape and unpredictable rules, which the business community says has hurt foreign investment.
Martin Pieters, after six years at the Vodafone India helm, took a parting shot at authorities on his last day, saying the operator had paid the government INR750 billion ($13.9 billion) over the last five years but had not given shareholders anything.
Prime Minister Narendra Modi’s new government, which comes to power in May, has made some changes to improve the country’s reputation.
