Vodafone hints at paying $2 b tax on Hutchison deal

PTI New Delhi | Updated on March 17, 2011


UK-based Vodafone has hinted that it may pay about $2 billion tax for buying majority stake in Hutchison in 2007 to end the dispute with the authorities, but warned that such a move will have backlash on Indian companies doing similar transactions overseas.

“...In the end we are businessmen, if there would be a good compromise we would probably, I guess, Vodafone group, would be willing to accept it,” Mr Marten Pieters, chief executive, Vodafone India, said in an interview to NDTV.

He however asserted that there was no case for levying tax on a deal that was done outside the country and that's “the basic question at the centre of the table”.

Mr Pieters cautioned that such a move would have a backlash on Indian companies doing similar mergers and acquisitions overseas, because “in retaliation, foreign governments may penalise them”.

The Income Tax department here has raised a demand of about $2 billion on Vodafone for buying majority stake of Hutchison in Hutchison-Essar in 2007 for over $11 billion.

The British company has challenged the decision and the issue is pending in the Supreme Court. It has already deposited some amount to the apex court pending the decision.

Asked if this would act as a deterrent to Vodafone's future plans in India, Mr Pieters said, “...Its really bad news but it is a one off and we are here to stay for the (next) 20 years. Which means I am far more interested in whether the conditions are good for the next two decades, than an old issue which I might not like but it happened.”

On reactions from Vodafone investors, he said this was bad news when it happened but “that news has been digested by Vodafone and the Vodafone investors, I think the first part of our discussion was about regulatory issues and how does the industry look going forward is much more important”.

Published on March 17, 2011

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