Vodafone steps up tax row with India

Vodafone store front Vodafone has told the Indian government it is moving towards international arbitration

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Vodafone has threatened to take India to international arbitration over planned retrospective tax legislation.

The firm is India's largest overseas corporate investor, but has been caught up in a five-year tax battle.

The issue relates to Vodafone's 2007 takeover of Hong Kong-based Hutchison Whampoa's Indian mobile unit.

Vodafone said a move to retrospectively tax overseas mergers would go against court decisions and legal protections given to investors.

As a result it said it had served the Indian government with a "notice of dispute" in a first step toward international arbitration.

And it argued that the new Indian tax legislation was an attempt to bypass a ruling by the country's Supreme Court in January that Vodafone was not liable for taxes and penalties of up to $4.4bn (£2.8bn)

To retroactively tax overseas mergers would "countermand" the court verdict and "violates international legal protections granted to Vodafone and other international investors in India", Vodafone added in a statement.

The notice was served by Vodafone's Dutch subsidiary.

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