UK-based Vodafone has said that the $ 2.6 billion tax liability on the company is inequitable and has asked why Indian authorities did not impose the tax claim on Hutchison, which made profit by selling its stake.
The company has reiterated its stand that no tax was payable on its deal with Hutchison Essar, wherein it purchased a majority stake in Hutchison for over $ 11 billion in 2007.
Indian tax authorities have asked the operator to pay $ 2.6 billion as tax on the deal.
According to Andy Halford, CFO, Vodafone Group, the deal is not governed by Indian tax rules and therefore, no tax is payable. He added that Hutchison should pay the tax amount, as the deal was profitable for it.
Prior to this, Vodafone had said that under existing Indian laws, it was not required to withhold tax on the deal, as the transaction was carried out in the Cayman Islands and both the buyer and seller were foreign entities.
Hutchison controlled its Indian subsidiary through a Cayman Island company called CGP, whose shares were sold to Vodafone. Vodafone has maintained that the $ 2 billion-tax demand is contrary to international taxation principles.
