Vodafone, Indian government yet to agree on third arbitrator in tax dispute

Vodafone, Indian government yet to agree on third arbitrator in tax dispute

18 AUG 2014

Vodafone and the Indian government have still to settle on the important choice of third arbitrator in their tax dispute, although The Economic Times reports relations have warmed between the two sides since the election of a new government under Prime Minister Narendra Modi.

The deadline for agreeing on the arbitrator has been extended by about one month, so delaying the possibility of a resolution to the long-running tax dispute.

A source said the delay did not reflect a growing tension and indicated the relationship between the two sides had improved under the Modi government. The source said both sides just needed more time to decide on the third arbitrator.

However, if no arbitrator is named by the next deadline then Vodafone reserves the right to take the matter to the International Court of Justice.

Taking into account add-on penalties as well as the tax allegedly owed, the bill for the operator could be as much as INR200 billion ($3.2 billion).

Former chief justice of India RC Lahoti has the role of government arbitrator while Vodafone has named lawyer Yves Fortier as its choice. The two arbitrators together have to agree on a third name.

The Modi government has said it would not deploy the retrospective changes in the law introduced by the previous government as it wants to encourage corporate investment. However, it has not scrapped the amendment made by the Congress-led UPA that initiated the tax bill on Vodafone.

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Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

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