TAX NEWS - JUNE 2010

India Tax: Vodafone Files Appeal In Bombay High Court Against India Tax Move

Vodafone International Holdings BV, a unit of Vodafone Group PLC, Monday filed an appeal in the Bombay High Court against Indian tax authorities' decision to ask the company to pay tax on its acquisition of a majority stake in local mobile-phone operator Hutchison Essar Ltd. for $11.2 billion in 2007.

Vodafone Group said in a statement that the appeal filed by unit Vodafone International Holdings BV is against the tax authorities' order of May 31, 2010.

Vodafone, the world's biggest mobile operator by sales, has been saying it isn't liable to be taxed in India because its deal to buy a 67% stake in Hutchison Essar from Cayman Islands registered CPG Ltd. took place on foreign soil. CPG is owned by Hutchison Telecommunications International Ltd.

India has been maintaining that Vodafone should have withheld tax on the government's behalf. It also said Vodafone is liable to pay taxes as the deal involved the transfer of an Indian asset.

The company said that approaching the high court is in line with a Supreme Court judgment in January 2009, granting Vodafone International a right of appeal if it disagreed with the tax authorities' view.

"Vodafone remains fully confident that no tax is payable and the legal advice we have received unanimously agrees," the statement added.