VODAFONE TAX CASE | VODAFONE HUTCH CASE | VODAFONE TAX CASE STUDYSonalS15
The Vodafone Tax Case is one of the most controversial Tax dispute in the history of Indian Income Tax Law.
FOR FREELANCE POWERPOINT PRESENTATIONS ON ANY TOPIC, MAIL ME AT sonalkumari8991@gmail.com
OBJECTIVE
OECD Inclusive Framework released a public consultation document on matters where its members seek input from stakeholders in conducting this 2020 review. This webinar shall touch upon the issues relating to implementation, scope and content of CbC Reporting set out in the document for public consultation.
As per section 92 of the Income Tax Act,1961 “Any
income arising from an international transaction shall
be computed having regard to the arm's length
price” Where in an international transaction two or
more associated enterprises enter into a mutual
agreement or arrangement for the allocation or
apportionment of, or any contribution to, any cost or
expense incurred or to be incurred in connection with
a benefit, service or facility provided or to be
provided to any one or more of such enterprises, the
cost or expense allocated or apportioned to, or, as
the case may be, contributed by, any such enterprise
shall be determined having regard to the arm's
length price of such benefit, service or facility, as the
case may be.
Key Takeaways:
- Facts of the case
- Issues and Orders
- Contention of the parties
- Observations of Honourable Supreme Court
- Conclusion and way forward
What are the key elements of the companies (amendment) bill, 2020DVSResearchFoundatio
Key Takeaways:
Salient features of the Bill
Decreminalisation of offences
Initiatives on ease of living to law abiding corporates
Relaxations under various provisions of the Act
VODAFONE TAX CASE | VODAFONE HUTCH CASE | VODAFONE TAX CASE STUDYSonalS15
The Vodafone Tax Case is one of the most controversial Tax dispute in the history of Indian Income Tax Law.
FOR FREELANCE POWERPOINT PRESENTATIONS ON ANY TOPIC, MAIL ME AT sonalkumari8991@gmail.com
OBJECTIVE
OECD Inclusive Framework released a public consultation document on matters where its members seek input from stakeholders in conducting this 2020 review. This webinar shall touch upon the issues relating to implementation, scope and content of CbC Reporting set out in the document for public consultation.
As per section 92 of the Income Tax Act,1961 “Any
income arising from an international transaction shall
be computed having regard to the arm's length
price” Where in an international transaction two or
more associated enterprises enter into a mutual
agreement or arrangement for the allocation or
apportionment of, or any contribution to, any cost or
expense incurred or to be incurred in connection with
a benefit, service or facility provided or to be
provided to any one or more of such enterprises, the
cost or expense allocated or apportioned to, or, as
the case may be, contributed by, any such enterprise
shall be determined having regard to the arm's
length price of such benefit, service or facility, as the
case may be.
Key Takeaways:
- Facts of the case
- Issues and Orders
- Contention of the parties
- Observations of Honourable Supreme Court
- Conclusion and way forward
What are the key elements of the companies (amendment) bill, 2020DVSResearchFoundatio
Key Takeaways:
Salient features of the Bill
Decreminalisation of offences
Initiatives on ease of living to law abiding corporates
Relaxations under various provisions of the Act
It is well known to all that the Indian telecom industry has been regularly beating target i.e. It has been grown like very complexly, dynamically as well as competitively. Because in the modern world every business is growth prospective oriented. And now-a day’s one of the major issue in Indian Telecom Industry is how to expand their own business through the latest technologies like mobile data. Mobile Data to meet the various requirements for various purposes of people. That’s why growth of data usage increase especially happens when business, travelers, academician and other professional needs to access email and other corporate applications during urgent trips and travels. Also youngsters are using smart phones and that’s why company also developed various applications like online shopping application(Flipkart,Snapdeal, Amazon, Jabong, Shopclus, etc.), various social media applications(Whatsapp, Messenger, Instragram, Twitter, etc.), online newspaper, songs applications(gaana.com, saavn.com, etc. ), various travelling applications (Uber, OLA Cab, GPS, Google Map, etc.), etc. So, without mobile data using these applications is not possible. So, now a day’s mobile data is very essential.
Vodafone strategic management analysis and business analysis vodafone strategy analysis, poster five forces analysis, porter five forces analysis,competitor analysis,swot nalysis,external and internal environment analysis
Strategic Analysis of Airtel Limited in Indian Telecom Sectorrajinderpal_12
The whole presentation depicts the Strategic Analysis of Airtel Limited in Indian Telecom sector. Here we talk about gradual evolution of Indian Telecom sector and growth of Airtel against its competitor. It also covers the internal value analysis of Airtel - Resource Based View.
It is really informative for anyone interested to know about Airtel and Indian Telecom sector.
Thanks
Rajinder
SCRAPPING OF RETRO TAX PROVISIONS : A REVIVAL OF OVERSEAS INTEREST IN INDIADVSResearchFoundatio
Key Takeaways:
- Scrapping of Restrospective effect of Taxation
- Indirect transfer of assets not taxable before 28th May 2012
- Vodafone case analysis
- Draft notification to implement the amendment
- The Asian landscape - uncertainty in the near term
- Structuring considerations
- Risk allocation amongst parties
Prabhu Narasimhan, Counsel, White & Case
Peita Menton, Partner, White & Case
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See a sample reprint in PDF format. Order a reprint of this article now
TECHNOLOGY JANUARY 21, 2012
India's Supreme Court backed Vodafone Group PLC's appeal against a $2.2 billion tax bill on its purchase of a
majority stake in India's Hutchison Essar Ltd. Amol Sharma and Lilly Vitorovich explain why this might be good news
for India.
By AMOL SH ARM A and R . J AI K RIS HN A
NEW DELHI—India's Supreme Court on Friday ruled that Vodafone Group PLC isn't liable to pay taxes on the
deal it struck to enter India in 2007, delivering a major victory to the British telecommunications giant and
providing some encouragement to foreign companies that are concerned about the country's investment climate.
The court's decision means that Vodafone won't have to pay more than $2 billion in taxes on its $11.2 billion
acquisition of a controlling stake in an Indian cellphone company from Hong Kong's Hutchison Whampoa Ltd.
Indian authorities don't have jurisdiction to tax the deal because it was structured as a transaction between two
foreign entities, a three-judge panel of the court said.
The verdict, which overturns a ruling by a lower court in Mumbai, comes after a four-year legal fight by
Vodafone in India. The tax case became a symbol for many foreign investors of the uncertainty of doing business
in India, the unpredictability of regulators and the risks foreign firms face if they decide to make big bets on
Indian growth.
In a statement, Vodafone Chief Executive Vittorio Colao said:
"We are a committed long-term investor in India and we have
made clear all along that we have faith in the Indian judicial
system. We welcome the Supreme Court's decision, which
underpins our confidence in India. We will continue to grow our
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Vodafone Overturns Tax Bill in India
Vodafone Overturns Tax Bill in India - WSJ.com http://online.wsj.com/article/SB100014240529702046...
1 of 4 1/22/2012 2:06 AM
Associated Press
India's Supreme Court ruled Vodafone doesn't have to
pay more than $2 billion in taxes for its acquisition of a
controlling stake in an Indian cellphone company.
Above, a man leaves a Vodafone store in Mumbai on
Friday.
More
Heard on the Street: Vodafone's Satisfying
Indian Takeaway
What Next for Vodafone in India?
The Man Who Ruled in Vodafone's Favor
Will Government Dilute the Vodafone
Verdict?
Indian business."
The court directed the tax department to refund the 25 billion
rupees ($500 million) that Vodafone, the world's biggest
wireless-service provider by sales, had deposited, along with 4%
interest.
Indian tax authorities can file what is known as a "review
petition" to seek clarifications from the court on some aspects of
the case, but haven't decided whether to do so, said Mohan
P.
Vodafone and hutch merged in 2007, which is the second largest Merger with a deal value of $11.1 billion. The pre and post merger key financial ratios of both the companies are presented.
Dear Readers,
We are pleased to present ‘TransPrice Times’ for the first fortnight of May 2015, providing highlights on transfer pricing developments.
We aim to provide an insight into some contentious transfer pricing issues and also equip you with the information on latest happenings in India.
Trust you will find it useful.
Happy reading !!!
Please give your feedback on following link: info@transprice.in
The taxpayer, a UK-based company, is engaged in providing technology, other support services, and software. For more check out the Tax Newsletter of December 2021.
The taxpayer, a UK-based company, is engaged in providing technology, other support services, and software. For more check out the Tax Newsletter of December 2021.
2. Agenda
• Background of vodaphone
• corporate structure
• Facts of the case
• Reasons for Hutchison’s exit
• Arguments of IT department and vodaphone
• Timelines of the case
• Supreme court decision
• Retrospective law
• Retrospective amendments in tax laws
• Present government
2
3. Background of vodaphone( voice data fone)
• Vodaphone group plc is a British multinational telecommunication company with
headquarters in London
• Vodaphone owns and operates network in 26 countries and has partner network in
over 50 additional countries
Revenue £40.97 billion (2016)
Operating income £1.37 billion (2016)
3
4. Corporate structure
• Hutchison Essar Ltd(HEL)
Indian company, providing telecom service
• Hutchison telecom international Ltd(HTIL)
Foreign company (situated at Hong Kong), holding 100% shares in CGP
investments holdings Ltd
• CGP investments holdings Ltd(CGP)
Foreign company situated at Cayman island, Mauritius
Holding 67% shares in HEL
Dummy company formed to have benefits of Mauritius route, as it is tax heaven
means no tax on any transactions
4
5. Facts of the case
• Hutchison telecom international Ltd(HTIL) had transferred 100% shares of CGP
investments for Rs.560 billion to vodaphone international holdings BV
• Indirect transfer of rights in HEL, by HTIL to vodaphone international holdings
BV
• Vodaphone international holdings BV
Foreign company situated in Netherlands
Subsidiary of vodaphone group plc ( situated in London)
5
6. Reasons for Hutchison’s exit
• Urban market in country had become saturated
• Future expansions have to be only through rural areas, which would be leading to falling
average revenue per user(ARPU) and consequently lower returns on investment
• HTIL also wanted to use the money earned through this deal to fund its business in
Europe
• The sale of its assets in India will enable Hutchison telecom to become one of Asia’s
best capitalized companies
6
7. Arguments of IT department
• The subject matter of the transaction between HTIL and vodaphone was a transfer on 67% in
HEL
• The transactions constitutes a transfer of composite rights of HTIL in HEL and not merely the
transfer of single share in CGP. The acquisition of shares is only one means to achieve the
object
• Several vital rights were acquired by vodaphone ( including license to conduct telecom business
in India, management rights, loans, option agreements, branch license etc.) and that such rights
as direct nexus in India
• The transaction was chargeable in India and that vodaphone was therefore required to withhold
appropriate taxes on payments made to Hutch
• Arguments of Vodaphone
Section 9 seeks to tax capital gains only if they arise from transfer of capital assets situated in
India. the impugned transaction involved the transfer of shares of a foreign company outside
India and was hence not taxable in India 7
8. Timelines of the case
• 2007 February: Vodafone buys 67% in Hutchison Essar for $11.5 billion. The company is
renamed Vodafone Essar
• September: The income-tax (IT) department slaps Vodafone with a tax demand of Rs 11,000
crore as the asset is in India
• October: Vodafone goes to Bombay High Court (HC) saying "it was a share transfer carried
outside India".
• 2008 February: Government amends Section 201 of IT Act, makes withholding tax mandatory
with retrospective effect
• December: HC dismisses Vodafone's petition, says IT department has right to investigate the
case; Vodafone appeals to Supreme Court(SC)
• 2009 January: SC dismisses Vodafone's appeal; leaves the decision on jurisdiction of the deal to
the IT department. Also refers the case back to Bombay HC
• 2010 January : Vodafone replies to IT notice saying IT department does not have jurisdiction
8
9. • June: Vodafone files petition in Bombay HC challenging IT department's order it has
jurisdiction
• August: High Court begins hearing case
• September: Bombay High Court says Vodafone must pay capital gains tax on the deal. Vodafone
appeals to SC
• September : SC asks IT department to quantify tax liability
• November: SC asks Vodafone to deposit Rs 2500 crore and provide bank guarantees of Rs 8500
crore , pending final verdict
• 2011
• March: Vodafone receives tax notice from IT department asking it to explain why it should not
be liable for penalties of up to 100% of the tax found due
• April: SC stays IT department from enforcing any liabilities till outcome of final hearing
• August: Supreme Court begins hearing the case
• 2012 January 20: Vodafone wins tax case in SC
9
10. Supreme court decision
• Accordingly, the Supreme Court concluded that the transfer of the share in CGP did
not result in the transfer of a capital asset situated in India, and gains from such
transfer could not be subject to Indian tax
• The Supreme Court held that gains arising from the said transaction were not liable to
tax in India, and that therefore there was no obligation on Vodafone to deduct tax at
source.
• The Supreme Court has directed the tax authorities to return INR 2500 crore which
was earlier deposited by Vodafone, along with 4 percent interest and return the bank
guarantee.
11. Retrospective laws
• Retrospective laws are ones that seek to change the law relating to the past – for
example a retrospective law may make people criminally responsible for doing
something that was not actually against the law when they did it.
11
12. Retrospective amendments in tax laws
• Certain retrospective amendments were made in tax laws by finance act 2012 to nullify
the judgment of supreme court.
• Section 9(1)(i) applicable w.e.f April 1,1961
All income accrued or arise, whether directly or indirectly through transfer of a “capital
asset” situated in India
• Section 2(14) applicable w.e.f April 1, 1961
Property includes and shall be deemed to have always included :
Any right in Indian company
Any right in relation to an Indian company 12
13. • Section 2(47) applicable w.e.f April 1, 1961
Transfer includes and shall be deemed to have always included :
Disposing of or parting with an asset or any interest therein
Creating any interest in any asset in any manner whether indirectly or otherwise
By way of an agreement ( whether entered into in India or outside India ) or
otherwise
Notwithstanding that such transfer of rights have been characterized as being
effected or dependent upon or flowing from the transfer of shares of a company
registered or incorporated outside India
13
14. Present government
• Finance minister had to assure that Vodafone type retrospective amendment would
not be repeated in future
• The government is keen to settle the issue quickly as it could undermine attempts to attract
investment to speed up economic growth from the 7.6% forecast for this year
• In a move to win over the confidence of international investors, the government offered one-
time settlement of cases emanating from retrospective amendment of tax laws, by asking
companies to pay the basic tax demand and get a waiver on interest and penalty
• In Vodafone’s case, the basic tax duties are about Rs 8,000 crore, while interests and penalties
could mount to over Rs 14,000 crore
14