India has asked a Vodafone Group Plc unit to pay 112.2 billion rupees ($2.5 billion) related to its purchase of Hutchison Whampoa Ltd.s mobile phone unit in the South Asian nation.
Vodafone International Holdings BV has 30 days to comply with the tax demand, according to a statement from the countrys Central Board of Direct Taxes today. Vodafone said it strongly disagrees with the tax calculation, and the matter will be reviewed by Indias Supreme Court Oct. 25, according to a company statement.
The Indian tax departments order is unfounded and the company will continue to take whatever actions are necessary to defend itself in this matter, it said in the statement.
The case relates to Vodafones $11 billion acquisition of a 67 percent stake in Hutchisons Indian mobile-phone unit in 2007. Indias finance ministry estimates Vodafones tax liability on the purchase at more than 120 billion rupees, S.S.N. Moorthy, chairman of the Central Board of Direct Taxes, said Sept. 27.
The company may be ordered to pay a part of the total liability pending a final judgment on the case, the Supreme Court said Sept. 27.
Vodafone Group has said it doesnt owe the Indian government taxes because the transaction was conducted offshore, with its Dutch unit acquiring a Cayman Islands holding company controlled by Hong Kong-based Hutchison.
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