Vodafone to fight $604m tax demand

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.