Business

Vodafone seeks arbitration in India tax dispute

A worker adjusting a Vodafone sign in India
India's Supreme Court had ruled that Vodafone does not owe any tax on the deal

Vodafone has sought international arbitration to resolve its tax dispute with the Indian government.

It relates to Vodafone's 2007 takeover of Hong Kong-based Hutchison Whampoa's Indian mobile unit for $11bn (£6.5bn).

Indian authorities have said the firm owes nearly $2.2bn in taxes over the deal, a claim the firm has disputed.

India's top court ruled in favour of Vodafone in 2012, but the government changed laws later that year to allow firms to be taxed retrospectively.

That development was criticised by investors and also triggered concerns among many foreign firms looking to enter India.

Vodafone's Dutch subsidiary acquired a 67% stake in CGP Investments Ltd, a Cayman Islands registered company which held the Indian telecom assets of Hutchison in May 2007.

Vodafone has long claimed that the deal was not subject to any taxes in India as the assets were held by a firm based in the Cayman Islands.

However, the Indian authorities presented it with a tax demand of 112bn rupees - equivalent $2.2bn at the time.

The Indian government subsequently also sought penalties of up to 100% of the original bill.

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