Vodafone to fight $604m tax demand

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Vodafone has received a final tax demand of about $604m from Indian authorities, adding to its tax disputes in the country since it bought Hutchison Whampoa’s mobile business there in 2007.

The mobile operator would appeal the order soon, it said in a statement yesterday.

Last year, Vodafone filed a petition in a local court in a so-called transfer pricing dispute after authorities sought to add 85 billion rupees ($1.4 bn) to the taxable income of a unit, Vodafone India Services Pvt Ltd, which provided call centre services to some group companies. In September, the Bombay High Court extended a stay on a final tax demand order by the authorities.

Transfer pricing is the value at which companies trade products, services or assets between units. Indian rules require all cross-border transactions between group companies to be valued at arm’s length – or at the same value as if the transaction was with an un-related company.

“Vodafone maintains there is no tax payable on this transaction and the company will file an appeal,” the company said.