Vodafone, Cairn Flag Conditions for the Settlement of Retroactive Tax Matters, Telecom News, ET Telecom

0
Bombay | Delhi: Vodafone Group and Cairn Energy have raised concerns about the proposed terms for settling retrospective tax cases that require them to provide stakeholder statements that they will not make any claims once disputes are resolved.

The two UK companies raised the questions in their comments on the draft rules released by the Central Direct Taxes Commission (CBDT) last month. Cairn called for the removal of the clause requiring all interested parties to waive claims.

Those familiar with the submissions to the government said the clause would be difficult to abide by as it places settlement responsibility on the company, including the avoidance of any frivolous third party litigation. “For a global business the number of such approvals would be extremely large and predicting whether or not a third party will raise a claim in the future is a difficult question,” said one of the people. “Cairn asked that the clause be removed.”

A Cairn Energy spokesperson did not respond to specific questions from ET, but said: “Cairn Energy is involved in ongoing constructive and friendly discussions with the Indian government to close the case in an open and transparent manner. . “
Vodafone and Cairn Flag Conditions for the Settlement of Retroactive Tax Matters
‘Discussions about’

The company will publish its half-year financial results on Tuesday.

In the case of Vodafone, people familiar with the development said it was difficult for an entity to provide a waiver of claims from existing and future shareholders.

“Who knows what mergers and investments will happen in the future? How can a company go ahead and do business with others by saying it has to sign this clause – that too after years of investment in the sector and the country, ”one informed person said. of business thinking.

The person added that the Vodafone group have always been keen to settle the case, but not with riders like this. The company did not respond to ET’s queries.

“It is too early to say what action the government will take. Negotiations and discussions are underway – we are analyzing the views,” said a senior official, confirming that several companies had sent their comments.

The government released the draft rules for settling retroactive cases on Aug. 28 after Parliament approved a law giving businesses until Sept. 4 to respond to the draft rules.

BNP Paribas’ take on possible ways to save Vi comes days after Aditya Birla Group Chairman Kumar Mangalam Birla met with Telecommunications Minister Ashwini Vaishnav in the context of the Ministry of Telecommunications (DoT) and the Ministry of Finance who are developing a contingency plan for heavily indebted telecommunications. sector.

They ask the parties to the dispute to detail each “interested party” and to provide their declaration of “irrevocable” withdrawal from any dispute and claim in the context of the procedure.

This would be in addition to their own commitment to withdraw any pending litigation or proceeding in any forum and an assurance that they would not pursue any further claims in the future.

Waivers of affiliates, successors, predecessors, parent companies, direct and indirect subsidiaries, assignees, agents, current and future shareholders, owners, directors, officers, funders and employees may be required.

“It is also a concern for other companies that have initiated arbitration against the government,” said a senior lawyer familiar with developments.

Case

In addition to Cairn Energy, 16 other companies including Vodafone Group, Vedanta, Mitsui, WNS Global and New Cingular Wireless have faced claims arising from the retrospective tax that came into effect on May 28, 2012.

Among these, there was a suspension by the high courts in two cases. International arbitration has been invoked in four treaties with the United Kingdom and the Netherlands.

In four of the cases, the government collected Rs 8,089 crore in taxes. The government will have to pay Rs 7,880 crore to Cairn, Rs 44.7 crore to Vodafone, Rs 119 crore to New Cingular Wireless and Rs 47 crore to WNS Global. Vodafone had not paid any of the 22,100 crore rupees in taxes, interest and penalties demanded by the government.

India recently amended its income tax laws to remove retrospective taxation on offshore transactions involving local assets. Tax claims raised on transactions involving the indirect transfer of Indian assets before May 28, 2012 will be canceled and any amounts collected refunded without interest. In return, companies must agree to withdraw litigation in all instances and waive any damages, interest or other costs. Companies will also have to waive any future claims.

The Vodafone Group and Cairn Energy won international tribunal awards against the government last year. Cairn won a prize of $ 1.2 billion, which the company says has now risen to $ 1.7 billion. He subsequently filed files in several jurisdictions to enforce the sentence and even had 20 Indian properties attached to Paris. India has appealed the arbitration orders in Singapore and the Netherlands.

Indian telecom operators like Bharti Airtel and Vodafone Idea see Open RAN as a financially viable method to reduce the huge capital expenditure (capex) and operating expense (opex) involved in building and maintaining a 5G network.


Source link

Share.

Leave A Reply