{"id":15471,"date":"2012-05-09T08:08:18","date_gmt":"2012-05-09T07:08:18","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=15471"},"modified":"2012-05-09T08:08:18","modified_gmt":"2012-05-09T07:08:18","slug":"indias-point-of-principle","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2012\/05\/09\/indias-point-of-principle\/","title":{"rendered":"India’s point of principle"},"content":{"rendered":"

India has courted international\u00a0controversy\u00a0by backdating reform in a law to ensure that Vodafone will owe tax on its purchase of its mobile\u00a0phone\u00a0network\u00a0in that country.<\/p>\n

As the New York Daily News <\/a>reports:<\/p>\n

India vowed Tuesday to push ahead with controversial legislation allowing it to retroactively tax such companies as British mobile phone giant Vodafone over cross-border business deals.<\/p>\n

The measure, which has stirred huge protests abroad from foreign investors, would oblige overseas firms to pay tax on transactions involving Indian assets routed through tax havens.<\/p>\n

\"India cannot become a no-tax country... a tax haven\" to lure international investors, finance minister Pranab Mukherjee told parliament.<\/p>\n

The amendment to India's Income Tax Act would bypass a Supreme Court ruling dismissing a $2.2-billion tax bill imposed on Vodafone over its takeover of Hong Kong-based Hutchison Whampoa's Indian cellular unit in 2007.<\/p>\n

Mukherjee did not mention Vodafone by name but said \"either you pay tax here or in your own country.\"<\/p>\n

\"There cannot be a situation where a somebody will make money on an asset located in India and will not pay tax either in India or the country of its origin,\" he told lawmakers.<\/p><\/blockquote>\n

\u00a0And that's the point of principle that India is supporting. The idea that a tax haven\u00a0effectively\u00a0lets you be 'elsewhere' or even 'nowhere' when it comes to paying tax (ideas I explore here<\/a>) is a just a legal fiction, and India is saying so.<\/div>\n
<\/div>\n
It's time a state said the tax lawyers are wearing no clothes. India is. And I know that there is a\u00a0question\u00a0of retrospection here - but India thought the law applied in this case, and still\u00a0believes\u00a0it does. So, just as the UK did with Barclays recently, it's backdating to make sure that is the case.<\/div>\n
<\/div>\n
And the point of\u00a0principle\u00a0it is making is far more important than the issue of retrospection. Which is why I support its move,\u00a0because\u00a0double non taxation via a tax haven is and always will be\u00a0unacceptable, and most especially when at cost to some of the poorest people in the world.<\/div>\n","protected":false},"excerpt":{"rendered":"

India has courted international\u00a0controversy\u00a0by backdating reform in a law to ensure that Vodafone will owe tax on its purchase of its mobile\u00a0phone\u00a0network\u00a0in that country. As
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