Colao, Osborne criticize proposed changes to Income Tax Act
Vodafone CEO Vittorio Colao and George Osborne, UK chancellor have both voiced their opposition to the proposed changes to the Income Tax Act by the Indian government that would allot it to retrospectively tax cross-border deals.
Mr Osborne warned that the government’s decision could hurt trade and investment between the two countries. He was speaking from the British High Commission in New Delhi during his visit to the country.
"We are concerned about the proposed budget measure, not just because of its impact on one company, Vodafone, but because we think it might damage the overall climate for investment in India," said Mr Osborne.
Meanwhile, Colao wrote a letter to the Prime Minister Manmohan Singh expressing his concerns over the changes to the law. Colao said that the proposed amendment would tarnish the image of India as an investment destination around the world. The Vodafone CEO also pointed out that it would not be acceptable for the government to introduce laws to overturn judgments of the Supreme Court Of India.
Finance Minister Pranab Mukherjee is backing the proposed changes to the Income Tax Act with retrospective effect, which could once again open the Vodafone tax case making company liable to pay about Rs 11,000 crore as tax for an acquisition deal.
global business chambers including Confederation of British Industry, U. S. Council for International Business and Japan Foreign Trade Council have written a letter to the Indian PM with their concerns over the proposed changes to the law.
Vodafone Group is planning its move over the tax claims as the government moves to change laws that will make the company liable to pay more than $2 billion in taxes.
The country’s highest court had said in a ruling that the British telecom giant has no dues to pay to the Indian taxation authorities. The company’s court victory in a case, lasting more than four years, came as the Supreme Court dismissed the government’s demand for $2.2 billion in taxes from Vodafone for its acquisition of Hutchison Whampoa Ltd’s India operations in 2007.
