Vodafone reportedly has offered to settle its INR200 billion ($3.01 billion) tax dispute with the Indian government that started in 2007, according to the country’s revenue secretary.
Hasmuskh Adhia, the financial services secretary, tweeted yesterday that the operator has “expressed its desire to go for conciliation for its tax disputes”. He said the government held a preliminary meeting with Vodafone a month ago to discuss its proposed conciliation, but noted that the terms have not been finalised.
The Central Board of Direct Taxes also issued a statement confirming Adhia’s tweet.
The Economic Times reported that the government offered to settle the case if Vodafone would pay the original tax amount of INR80 billion out of the total INR200 billion demand, and would waive the interest and penalties.
Vodafone has been locked in a long-running tax dispute with the government over its $11 billion acquisition in 2007 of Hutchison-Essar, which was later renamed Vodafone India.
Its case improved in October when the Bombay High Court ruled in favour of Vodafone in the dispute. The court set aside an order by the Income Tax Appellate Tribunal that had previously ruled that the tax authorities had the power to levy the tax on Vodafone in a transfer pricing case dating back to 2008.
Vodafone, however, continues to face a separate case over the capital gains from the acquisition that is going into international arbitration.
The tax disputes have damaged the country’s investment climate, which the Narendra Modi-led government has vowed to improve by having a more stable tax corporate structure.
Vodafone CEO Vittorio Colao said in October it was preparing an initial public offering of its Indian unit, the country’s second largest operator, “subject to market conditions”. He didn’t lay out a timeline.
A few months ago, it was reported that Vodafone had appointed investment bank NM Rothschild to work on the proposed offering, with the aim of raising $4 billion.