Mergers and Acquistions News
Categories: Telecoms
October 25th 2010, 17:23PM
Mobile giant Vodafone has been ordered to pay 112 billion rupees (£1.6 billion) in back-tax by Indian financial authorities.
The notice springs from Vodafone's acquisition of Hutchison Whampoa, an Indian telecoms firm, back in 2007.
Vodafone said that because the transaction was completed by two offshore firms, the deal, worth £6.9 billion, was exempt from tax.
However, the Indian tax department disputes this and has given Vodafone 30 days to respond to the demand.
"Vodafone strongly disagrees with the tax calculation," the company said in a statement.
"In this 'test case', the tax authority is attempting to interpret Indian law as it has never been interpreted for the past 50 years, and this interpretation also goes against internationally recognised tax norms."
Vittorio Colao, global chief executive of Vodafone, told India's Economic Times newspaper: "I have invested more in India because I do believe in the country, but of course now I also need a positive outcome from the tax case and stable regulatory environment to continue."
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