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• Friday, December 20th, 2013

Transfer Pricing Order Issued Against Vodafone IndiaTax related regulatory affairs are in limelight in India these days. The chief among these issues is the transfer pricing laws of India that are claimed to be violated by many multi national telecom companies in India.

For instance, Shell India has received a transfer pricing order from Indian tax authorities. Similarly, Nokia has been accused of violating income tax and transfer pricing laws of India. So much so that forensics analysis of Nokia’s computer used to download software in India has been undertaken by tax officials.

Similarly, the vexing tax troubles of Vodafone are not coming to an end. Vodafone is still struggling with the retrospective tax demands by Indian tax authorities. It has been claimed that Vodafone may invoke arbitration for fresh tax demands by India. Now the tax authorities of India have issued a transfer pricing order against Vodafone.

Vodafone will challenge this order that arose due to the sale of shares of its Indian unit to a Mauritius-based group company. Vodafone maintains that share subscriptions are not covered by transfer pricing rules either in India or internationally and it has no basis in law.

Vodafone has also filed a writ petition challenging the jurisdictional issues on the basis of precedent established in the recent Vodafone International Holdings BV – Hutchison Supreme Court judgement.

Meanwhile Indian legislature has also undertaken few legislative steps to strengthen taxation laws of India and to prevent tax evasion in India. The next session of the Parliament may witness some regulatory issues in this regard.

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