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Economy Jan 7, 2013

Govt likely to amend retrospective tax rules next month

The government is likely to approach parliament next month to water down retrospective tax rules that damaged investor confidence, two finance ministry officials said on Monday, in a move that may help settle UK-based Vodafone Group's long-runnning $2 billion tax dispute.

Vodafone, the largest overseas corporate investor in India, has repeatedly clashed with Indian authorities over taxes since it bought Hutchison Whampoa's local mobile business in 2007.

Vodafone Group said on Saturday it has received a reminder from Indian tax authorities on the disputed tax dues.

Vodafone said the reminder does not include a deadline for payment.

AFP

"Vodafone has replied to this reminder, stating that it continues to believe that no tax is payable on the above transaction," the statement said.

Earlier on Saturday, the Economic Times reported that tax authorities had asked Vodafone to pay Rs 14,000 crore, including interest on the tax dues after an 'informal dialogue' failed to produce result.

"The ball is now in Vodafone's court as the bilateral investment protection treaties are entirely investor-driven," Economic Times quoted a government official as saying.

Last April, Vodafone threatened the Indian government with arbitration proceedings in its fight over the retrospective tax proposal.

The government was heavily criticised by the corporate sector for introducing the tough tax rules last year at a time India was suffering a sharp economic slowdown and trying to encourage investment.

Vodafone Group said on Saturday it has received a reminder from Indian tax authorities on disputed tax dues over its 2007 acquisition of Indian mobile assets.

Vodafonesaid in a statement the reminder does not include a deadline for payment.

"Vodafone has replied to this reminder, stating that it continues to believe that no tax is payable on the above transaction," the statement said.

Earlier on Saturday, the Economic Times reported that tax authorities had asked Vodafone to pay Rs 14,000 crore, including interest on the tax dues after an 'informal dialogue' failed to produce result.

"The ball is now in Vodafone's court as the bilateral investment protection treaties are entirely investor-driven," Economic Times quoted a government official as saying.

Last April, Vodafone threatened the Indian government with arbitration proceedings in its fight over the retrospective tax proposal.

Reuters


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