Vodafone's Dutch Subsidiary bought a company in the Cayman Islands, in a transaction paid for in foreign currency. Vodafone is a buyer, and not subject to their worry for the last year or so? That the Indian Government wants to tax them.
India has a case. The company being bought controls Vodafone India, one of the largest Telecom operators here. The deal was done abroad purely to avoid Indian capital gains tax that Hutchison would otherwise need to pay, if they sold the Indian company instead. Nearly all of what the Cayman Islands based entity owned was the Indian company's assets in India. Yes, the tax would apply to Hutchison, but Vodafone should have cut taxes on the purchase and paid that to the Indian government.
Vodafone went to court and after a long battle, won the case. The Court specifically said that the law wasn't clear on whether such transactions, done abroad, are subject to Indian capital gains tax. The Direct Tax Code (DTC) does clarify, but the bill approving the DTCRead More »from The Vodafone Overreach and the Failure of Trust