Previously published in RAK Free Spirit Magazine
Adriaan Struijk, probes the new tax legislation developments in
India that may negatively affect its foreign direct investment
potential.
India's reputation as a country safe for investors received
a boost when its Supreme Court ruled in favour of the taxpayer in
the case of Vodafone vs Indian Tax Authority on 22 January this
year.
The case concerned a tax dispute in relation to the acquisition
by Vodafone International Holdings BV (VIH), a Dutch company, of
CGP Investments (Holdings) Ltd (CGP), a Cayman Islands company, in
2007. As a result of this purchase, VIH indirectly acquired a 67%
interest in Hutchison Essar Limited, an Indian company. The Indian
tax authorities sought to tax the capital gains arising from the
sale of the share capital of CGP on the basis that CGP, whilst not
a tax resident in India, held the underlying Indian asset.
