Nishith desai associates is special counsel to vodafone in the case described in the article, and the. The prime reason for such a move by tax authorities was the structuring of hutchisons stake in hutchison essar. Under indian law the sale of a company in india can lead to a possible capital gains tax bill which is quite. Aug 30, 2017 income tax department seeks rs 32,320 crore from hutchison over vodafone deal this is the first time a tax demand on the hong kong firm is being raised. An issue squarely won by vodafone in a proactive tax war with the authorities at the honble s. Case law vodafone case vs income tax department vodafone india, formerly vodafone essar and hutchison essar, is the second largest mobile network in india.
Income tax one among st the main issues surrounding the impasse is the payment of ejected liability carrying a whopping sum of rs. All you wanted to know about the vodafone tax case the. Income tax department seeks rs 32,320 crore from hutchison. Long long ago in 2007 vodafone international holdings bv decided to expand its footprint in the indian mobile phone market by buying out hutchison essar. Hutchison essar was taxable in india as a profit of htil. If you havent completed your 200910 selfassessment tax return, says its latest press release, you must file online. On 20 january 2012, the supreme court of india delivered a.
Generally, companies that can work within the tax code to pay lower taxes are looked upon favorably by investors, since these tax savings indirectly accrue to shareholders. Vodafone idea is a panindia integrated gsm operator offering 2g, 3g and 4g volte mobile services under two brands named vodafone and idea. To the it department, this amounted to a case of tax evasion more so. Aside from the question of extraterritoriality, the tax office relied on a retrospective change in law enacted in february 2008 to assert a withholding obligation against vihbv. Last year british telecom giant vodafone paid hong kong based hutchison international over usd 11 billion to buy hutchison s 67% stake in indian telecom company hutchison essar. It was being alleged by the indian tax authorities that the transaction involved purchase of assets of an indian company, and therefore the transaction, or. Vodafone india is the indian subsidiary of ukbased vodafone group plc and is a provider of. Tax department on the one side and vodafone on the other for the cosmic figure of. Is a wholly owned subsidiary of vodafone teleservices india holdings ltd. Vodafone questions imposition of income tax of over usd 2 billion tax on its deal to buy hutchisons assets in india in 2007, saying the company was the buyer and not a seller. Hutchison hongkong is a non resident having no tax implications in india. A realists account of the bombay high courts decision in.
As of march 2018, vodafone india has a market share of 21% and with its merger with idea, the collective vodafone idea network has approximately 375 million subscribers and is the second largest mobile. Taxation and our total economic contribution to public. Hutchison vodafone tax case too much knowledgeable 1. If you havent completed your 200910 selfassessment tax return. Corporate structure hutchison essar ltd hel indian company providing telecom services hutchison telecom international ltd htil foreign company situated at hong kong holding 100% shares in cgp investments holdings ltd cgp investments holdings ltd cgp foreign. Recent tax developments in india highlight the need for focused legal advice on indiarelated cross border transactions. The vodafone case and its effects on indian taxation article.
An analysis of the spa shows that clause 2 is expressly subject to. Dec 18, 20 the company said there had been no change in its ongoing dispute with indian authorities over an alleged. Corporate structure hutchison essar ltd hel indian company providing telecom services hutchison telecom international ltd htil foreign company situated at hong kong holding 100% shares in cgp investments holdings ltd cgp investments holdings ltd cgp foreign company situated at cayman. The decision of the indian supreme court in vodafone and. In one of the most high profile cross border tax litigation involving taxability of a. Vodafones supreme court victory in india pdf slaughter and may.
A goal of transfer pricing may be to maximize after tax revenue besides reduction in the total tax paid. Vodafones tax case leaves a sour taste this article is more than 9 years old. Abstract vodafone is recognized globally as a seminal case in which the taxation of indirect transfer of shares was litigated before a countrys highest judicial. The income tax department in fact publicly declared that their attempt to hold the transaction between vodafone and hutchison taxable was a test case.
The quantum of tax demand by the indian revenue authorities in this particular case was around. The curious case of extraterritorial taxation in india lexology. Acquisition of hutchison essar india by vodafone american. Firstly, by making its own infrastructure, opening braches across india, recruiting its workers and what not. All you need to know about vodafone tax case zee business. Govt to appoint arbitrator in vodafone tax case times of india. The curious case of extraterritorial taxation in india. Good afternoon cci members from the time when the famous vodafone tax cases was adjudicated, there has been this curiosity among the students of ca including me as to why it is such a landmark case and why is there such a big havoc created with respect to. Jun 26, 2017 vodafone company in england wanted to enter in indian market in 2007. In may 2007, vodafone took over hutchison essar india through a deal with. Following its holistic approach, the supreme court found that the transaction between vodafone and the hutchison group was exactly as the.
Last year british telecom giant vodafone paid hong kong based hutchison international over usd 11 billion to buy hutchisons 67% stake in. Vodafone tax case a case study for investments in india. The tax season just ended in india with the end of the year tax assessments on september 30 and many companies were busy with their filings. The department of revenue ts57hc20 ap not have any impact on the interpretation of the tax treaty provisions. Vodafones tax case leaves a sour taste richard murphy. The supreme court had ruled in vodafones favour in 2012, saying the company was not liable to pay any tax over the acquisition of assets in india from hong kongbased hutchison. Jan 31, 2017 recent tax developments in india highlight the need for focused legal advice on indiarelated cross border transactions. The only statutory provision to assist the court is section 9 of the indian income tax act, 1961 hereinafter referred to as the. The court observed that in this case, the last subclause of the. Does the indian revenue service have authority to tax vodafone for the. What exactly was the problem in the vodafonehutchison tax case. We also offer free sim home delivery with new postpaid connection.
Under indian law the sale of a company in india can lead to. In india there was the earlier case over the purchase of the hutchisonessar business. Group owned interest in the indian operating company hutchison essar ltd. Department submission the issue of chapter x of the act being applicable is no longer res integra as identical provision as found in section 92 of the act was available in section 422 of the income tax. Further, it was held that the retrospective amendments to provisions of the incometax act, 1961 the act do 1sanofi pasteur holding sa v. Govt to appoint arbitrator in vodafone tax case times of. Vodafone company in england wanted to enter in indian market in 2007. Chronology of events the supreme court today directed the it department to return rs. In a local stock exchange filing, ck hutchison holdings has said its unit, hutchison telecommunications. How vodafone made tax dodging respectable nick cohen. Vodafone defends zero corporation tax bill telegraph.
Tax department to challenge hc ruling in vodafone case. If the sum credited by the payer is not chargeable to tax then. At the time, indian tax authorities did not have a say in the companys doings as the deal was done entirely offshore. Nikhil mehta tax barrister in grays inn tax chambers and international tax counsel to. Vodafone tax case free download as powerpoint presentation.
All you wanted to know about the vodafone tax case the hindu. Oct 22, 2010 vodafone s tax case leaves a sour taste this article is more than 9 years old. What exactly was the problem in the vodafonehutchison tax. Incontrovertibly, the vodafone case presents the indian courts with a choice to either tax the hutchison gains or to declare the transaction tax free in india. Union of india, the petitioner vodafone based in netherlands acquired cayman islandsbased company cgp holdings limited from hutchinson telecommunications international limited. Jan 01, 20 hutchison vodafone tax case too much knowledgeable 1. Vodafone idea limited is an indian telecom operator with its headquarters based in mumbai, maharashtra and gandhinagar, gujarat.
Hutchison essar being a company situated in india was seen by the income tax authorities as the target company, and they contended that the purpose. Vodafone hutchison australia published a tax transparency report in november 2017 in response to the introduction of a voluntary. Aditi mukundan is a member of the international tax practice group and bijal ajinkya heads the interna. Oct 10, 2014 in india there was the earlier case over the purchase of the hutchison essar business. Acquisition of hutchison essar india by vodafone u. Vodafone tax case summary must see income tax forum.
Vodafone group won another big tax battle in india as a local court ruled thursday that it didnt owe potentially hundreds of millions of dollars in back taxes. Cayman island mauritius was a 100 % subsidiary of hutchison hongkong. Vodafone idea also provides services including mobile payments, iot, enterprise offerings and entertainment, accessible. All you wanted to know about the vodafone tax case. The vodafone hutchison case and its implications vccircle. Hutchison essar limited subsequently renamed vodafone essar ltd. The vodafone tax case throws an interesting question on the taxability of a non resident company acquiring shares of a resident company through an indirect route.
Jul 09, 2015 the supreme court had ruled in vodafone s favour in 2012, saying the company was not liable to pay any tax over the acquisition of assets in india from hong kongbased hutchison. Effective tax rates show a companys anticipated tax bill as a percentage of taxable income. Vs union of india bombay high court decision introduction of case vodafone india services p ltd. The court held that a prima facie case was made out by the tax authorities of transfer of capital assets, and therefore accrual of capital gains and hence was liable to pay the capital gains tax. So far, the indian government had been pursuing the tax from vodafone. Vodafone casesummarised by rohit kapoor vodafone case summarised by rohit kapoor facts of the case.
Please select your local market to display the contact details of your helpdesk. Our 4g mobile network covers more than 22 million australians, and vodafone nbn fixed broadband services is available in capital cities. Scribd is the worlds largest social reading and publishing site. India to change tax law after vodafone case financial times. This is a landmark case, as it is for the first time that the tax departments have sought to tax a company through a mechanism of tracing the source of acquisition. Revenue, based on an analysis of the spa, contends. Vodafone idea also provides services including mobile payments, iot, enterprise offerings and entertainment, accessible via both digital channels as well as onground touch points, centres across the. Vodafone australia is an australian telecommunications company providing mobile and fixed broadband services. Apr 20, 2011 vodafone questions imposition of income tax of over usd 2 billion tax on its deal to buy hutchison s assets in india in 2007, saying the company was the buyer and not a seller. In this case, such a contingency does not arise as there is no impact on income which would be chargeable to tax due to issue of shares. However, the companys subsidiary exchanged cash for shares with a similar holding company for hutchison essar, in far off cayman islands.
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