Even as controversy rages over the government's decision to amend the I-T Act with retrospective effect to bring overseas deals involving domestic assets under the tax net, British telecom major Vodafone today said the proposal was not in line with the international tax norms.
"...the proposal to tax indirect transfers of Indian companies is without regard to international taxing norms and is not in line with the OECD or the UN model double taxation treaty," Vodafone said in a statement.
This came in response to a statement by revenue secretary RS Gujral who had said that Vodafone-type deals were taxed in the US, the UK, other OECD countries and China.
Vodafone, however, asserted "it is completely incorrect to suggest that these transactions were taxable in the USA, UK or any other Organisation for Economic Cooperation and Development (OECD) member state. They would not seek to tax the indirect transfer of shares as proposed by India."
The bone of contention between the revenue department and the British telecom major is finance minister Pranab Mukherjee's 2012 budget proposal that seeks to amend the Income Tax Act with retrospective effect.
The amendment, once approved by Parliament, would make Vodafone liable to pay Rs11,000 crore tax to the government from its acquisition of Hutchison's stake in Hutchison Essar Ltd for $11.2 billion in 2007.