The Dutch government is making renewed attempts to make the Indian government compromise on the tax demand on Vodafone, according to news reports.
The income tax department has fixed a Rs 120 billion tax claim on the 2007 deal in which Vodafone bought Hutch?s 67 per cent stake in Hutchison Essar for $11.2 billion.
The tax authorities say Vodafone is liable to pay capital gains tax, as the assets in question are based in India. Vodafone says Indian revenue authorities have no jurisdiction, since the deal was done between two foreign entities.
The Dutch government is interested since the deal was done between Hutchison Telecom International?s holding company, CGP, based in the Cayman Islands, and Vodafone International Holdings BV (VIHBV), situated in the Netherlands. VIHBV is a wholly owned subsidiary of Britain-based Vodafone Plc.
Prior to this, it had approached the Indian government for an out-of-court settlement, but was rebuffed. It is now trying again.
