This is a fascinating story that is still developing. Indian authorities are asserting the right to collect capital gains tax the sale of Hutchinson Essar from Hutchinson to Vodafone. Vodafone claims in the first instance that this is a transaction between 2 non-Indian companies and therefore can't be taxed by India. This argument is erroneous and violates core principles of international taxation. Vodafone's claim in the second instance is that the seller should be taxed. While this argument makes sense, it is also perfectly normal that Indian law would require the purchaser to withhold the tax amount. This case will likely be solved with Vodafone paying off some low level bureaucrat, but the proper resolution is for Vodafone to take the hit.

 

Submitted: Nov 1, 2007    Views: 290    Comments: 0    Likes: 10   


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