Vodafone India Tax :Vodafone’s India tax victory may come with a twist

Vodafone’s victory over India’s tax authorities might have a sting within the tail. the united kingdom phone giant’s $2.2 billion Supreme Court win may be a boost to India’s battered name. It additionally bodes well for corporations like AT&T, that are threatened with similar tax bills. however if the govt currently changes the law, future offshore M&A deals might not escape thus simply.

The verdict is clearly nice news for Vodafone, that had put aside $5 billion in case the ruling went against it and it had to pay penalties on prime of its tax bill.

It additionally appearance promising for different corporations that are threatened with similar cases. These includes the likes of SABMiller, that incorporates a pending case associated with its 2006 purchase of the Indian division of Fosters, and multinationals as well as AT&T, E*Trade and Kraft.

And although the ruling is dangerous for the Indian government’s coffers, it's excellent news for the country’s international standing. Foreign investors and even domestic corporations seem genuinely delighted that the court has taken what they see as a good legal call instead of blindly siding with the govt.

Vodafone argued successfully that the Indian government has no jurisdiction over a transaction between 2 foreign corporations occurring on foreign soil. In no different major economy would the same transaction between 2 foreign entities have faced such taxes. What’s a lot of, if anyone was answerable for tax it ought to are the vendor, Hutchison Whampoa, instead of Vodafone.

Yet whereas the legal case was easy, there's a robust ethical counterargument. The business that modified hands was entirely primarily based in India. whereas it’s excellent news that the rule of law has been upheld, the law may be modified.

The end of the legal battle provides the Indian government a chance to replicate on whether or not to bring new legislation. different countries have struggled to tax the sale and get of assets that are controlled by offshore corporations. however that doesn’t mean India shouldn’t attempt.
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