Vodafone Group Plc Needs to Clear Back Taxes

For the unaware, the Indian government’s claim of Rs 22,100 crore from Vodafone in back taxes was denied last year in September. The penalties and back taxes that Vodafone has to pay relates to the acquisition that the company made in 2007 in India.

Highlights

  • Vodafone Group Plc is one of the major promoters in the Indian firm Vodafone Idea (Vi)
  • Indian government’s claim of Rs 22,100 crore from Vodafone in back taxes was denied last year
  • Indian government applied in Singapore for setting aside the arbitration award to Vodafone primarily on Jurisdiction grounds

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The Indian government has challenged a decision of the international arbitration tribunal, which overturned its demand of Rs 22,100 crore from Vodafone Group Plc. The amount that the Indian government is looking to recover from the Vodafone group is for back taxes. Note that this is not the Indian firm ‘Vodafone Idea’, but the international company ‘Vodafone Group Plc’. According to a PTI report, the appeal of the Indian government has been transferred to a senior court in Singapore, and the hearing has been scheduled for September 2021.

International Arbitration Had Denied Indian Government’s Claim

For the unaware, the Indian government’s claim of Rs 22,100 crore from Vodafone in back taxes was denied last year in September. The penalties and back taxes that Vodafone has to pay relates to the acquisition that the company made in 2007 in India.

To seek further help, the Indian government applied in Singapore for setting aside the arbitration award to Vodafone primarily on Jurisdiction grounds. The proceeding has been transferred to a senior court, and the hearing date has been set for September.

The reason why the Singapore court has been chosen for further proceedings is that the Southeast Asian nation was in the seat of the arbitration. It will be interesting to see which side the court will rule on.

Vodafone Group Plc is one of the major promoters in the Indian firm Vodafone Idea (Vi). However, the liability that the Indian government is going after is solely borne by the international firm, and Vodafone Idea has nothing to do with this. Thus, just to be clear, Vi won’t have to pay a single penny from its bank to the government regarding this.

The Indian government has been persistently chasing the Vodafone group for the dues that it owes. The amount won’t hurt the Vodafone Group a big time since it is a very big entity already operating in several nations and has a strong financial ground.

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