Vodafone case an instance of misusing corporate infra

Vodafone case an instance of misusing corporate infra

Amid ongoing tax battle with Vodafone over its acquisition of Hutchison-stake in telecom joint venture Hutchison-Essar, the government on Monday said the case is an instance of misusing corporate structure to avoid taxes.

“The Vodafone tax case provides an instance of the misuse of corporate structure for avoiding the payment of taxes,” the White Paper on black money tabled by Finance Minister Pranab Mukherjee in the Parliament said.

The Hutchison Group sold its entire business operation in India in February 2007 to the Vodafone Group for a total consideration of $11.2 billion. The same was effected through transfer of a solitary share of a Cayman Islands company, according to the White Paper.

“In this case, the Hutchison Group had made investments in India from 1992 to 2006 through a number of subsidiaries having ‘separate corporate personality’ but which were essentially post box companies based in the Cayman Islands, British Virgin Islands, and Mauritius,” the White Paper noted.

“When the tax authorities requested the accounts of the said company, the answer given was that as per Cayman Islands law, the company was not required to prepare its accounts,” it said.

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