Vodafone wins arbitration against India in $2bn tax case

NEW DELHI: Vodafone Group Plc has won an international arbitration case against the Indian government in a $2 billion tax dispute, two sources with direct knowledge of the matter said.
An international arbitration tribunal in The Hague ruled that India’s imposition of a tax liability on Vodafone, as well as interest and penalties, were in a breach of an investment treaty agreement between India and the Netherlands, one of the sources said.
The tribunal, in its ruling, said the government must cease seeking the dues from Vodafone and should also pay £4.3 million ($5.47 million) to the company as partial compensation for its legal costs, the source said. Vodafone and India’s finance ministry did not immediately respond to a request for comment.
The tax dispute stems from Vodafone’s acquisition of the Indian mobile assets from Hutchison Whampoa in 2007. The government said Vodafone was liable to pay taxes on the acquisition, which the company contested. In 2012, India’s top court ruled in favour of the telecom provider but the government later that year changed the rules to enable it to tax deals that had already been concluded. In April 2014, Vodafone initiated arbitration proceedings against India.