Facing an imminent tax demand notice of up to Rs 20,000 crore, British telecom giant today slammed government decision to go ahead with its retrospective tax law amendment as "grossly unjust" and said it will take all possible steps to safeguard its shareholders' interest.
With Lok Sabha approving the Finance Bill that amends law to retrospectively tax cross-border transactions dating back to April 1, 1962, Vodafone faces a tax demand of Rs 11,000 crore plus interest and a penalty on its 2007 acquisition of Hutchison Whampoa Ltd's Indian operations.
"We are naturally disappointed that, despite very widespread concern in India and internationally, the government has not seen fit to propose amendments to address the uncertainty caused by retrospective tax legislation," Vodafone said in a statement.
Vodafone, which had paid USD 10.7 billion in 2007 to buy Hutchison's stake, said it would be grossly unjust if the company is charged tax "on a gain made by someone else".
"We are studying the legislation as amended, and will take all possible steps to safeguard our shareholders' interests," it said.
Finance minister Pranab Mukherjee on Tuesday made it clear there was no rethink on the proposal to allow authorities to tax older corporate deals.
"There cannot be a situation that somebody will make money on an asset located in India and will not pay tax either in India or to the country of its origin," Mukherjee had said in his reply during the Finance Bill debate in the Lok Sabha. The bill was passed by a voice vote.
Vodafone had in January won a Rs 11,200-crore tax battle after the Supreme Court ruled it was not liable to pay any taxes under prevailing laws.
The finance ministry then proposed in the Budget to impose a retrospective provision for tax on some types of international mergers.
Various corporate bodies from the UK and US have cautioned that the tax proposal could dent India's image as an investment hotspot.
Vodafone said it has invested over Rs 50,000 crore in its operations in the country and has also been one of the larger taxpayers in India, paying over Rs 29,000 crore.
"To underline our commitment for the long term, despite making considerable investments over the past five years, Vodafone has yet to take a single rupee out of the country," Vodafone claimed.