Vodafone exudes confidence in BJP govt for settlement of tax row

Telecom operator Vodafone is hopeful that its long pending tax dispute will be resolved under the BJP regime, as per media reports.

In a recent interview to the Economic Times, Vodafone India chief executive Marten Pieters has said that the Narendra Modi government has raised hope for resolving the tax dispute.  He had said: "Modi himself and his BJP colleagues have taken a very clear public stance on how bad retrospective tax is. So, they will have a different look at tax, but does that mean the Vodafone tax case will go away?"

The Income-tax authorities had asked Vodafone to pay a principal liability of Rs 8,000 crore over its $11-bn acquisition of Hutchison Telecommunications International's majority stake in Hutchison Essar in 2007.

The tax has now grown to Rs 20,000 crore, including penalty and interest.

Challenging the tax claim in 2012, Vodafone had said in the Supreme Court that no tax was payable as the deal took place between two companies based abroad. But the government changed laws to tax such transactions retroactively.

Government’s approach to settle it through informal talks earlier this year also did not fructify. As a result, Vodafone has invoked international arbitration to resolve the issue.

Last week, Vodafone's external affairs director Mathew Kirk met finance secretary Arvind Mayaram and revenue secretary Rajiv Tikru, the reports said.

A finance ministry official had informed that the company is eager to settle the dispute amicably. The ministry has to look for an arbitrator before June 15.

Media reports said that until the tax dispute gets resolved, Vodafone is not likely to take a call on its IPO, a plan which was shelved two years back.

According to Pieters, "the big boss (Vodafone Group CEO Vittorio Colao) has said that he wants the tax case to be resolved before we can process the IPO, and from his perspective I can imagine he wants a good feeling on the case."