By Prasanta Sahu
NEW DELHI--Senior Indian tax officials will meet representatives
of Vodafone Group PLC (VOD, VODPF, VOD.LN) next week to try and
resolve a tax dispute with the British company, a senior finance
ministry official said Saturday.
Vodafone is fighting a prolonged battle with the Indian
government over a potential tax bill on its 2007 acquisition of a
controlling stake in a domestic telecommunications company to enter
India.
The latest development follows Indian officials sending Vodafone
another notice earlier this month demanding more than $2 billion in
taxes on the deal.
The U.K.-based Vodafone told the Indian government in a reply
that "it continues to believe that no tax is payable on this
transaction."
India's Revenue Secretary Sumit Bose and Poonam Kishore Saxena,
chairman of India's Central Board of Direct Taxes, will meet the
representatives of Vodafone, said the official, who declined to be
named.
Vodafone did not respond to requests for comment.
The proposed meeting has again raised hopes of an amicable
resolution of the Vodafone tax case.
The widely publicized case had stoked concerns among foreign
investors, especially after the Indian government last year amended
a law to permit retroactive taxation of deals in which foreign
companies take over domestic assets. The cash-strapped government
is keen to raise revenue as the nation's economy slows.
The tax claim against Vodafone stems from its $11.2 billion
purchase of 67% of the Indian operations of Hutchison Whampoa Ltd.
(HUWHY, 0013.HK). The mobile-phone company, now named Vodafone
India Ltd., is the country's third-largest by customer volume.
India had sought to penalize Vodafone for not paying taxes on
the deal. Tax officials had previously said it was liable for about
$3.75 billion in taxes, interest and penalties.
Vodafone scored a victory in January 2012, when India's Supreme
Court ruled that Vodafone didn't have to pay tax on the transaction
because it was between two foreign companies--the Dutch unit of
Vodafone and a Cayman Islands-registered unit of Hutchison.
The new tax law was intended to override the Supreme Court's
ruling.
It drew criticism from foreign investors who said they feared it
would lead the authorities to make fresh tax demands on already
concluded deals.
(Mukesh Jagota also contributed to this article.)
-Write to Prasanta Sahu at prasanta.sahu@dowjones.com
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