312 Vodafone India Indias telecommunication network is the second largest in

312 vodafone india indias telecommunication network

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3.1.2 Vodafone India India's telecommunication network is the second-largest in the world by the number of telephone users with 1.183 billion subscribers as of 31 May 2019. It has one of the lowest call-tariffs in the world enabled by mega telecom operators and hyper- competition among them. Telecommunication has supported the socioeconomic development of India and has played a significant role to narrow down the rural-urban digital divide to some extent. It also has helped to increase the transparency of governance with the introduction of e-governance in India. The government has pragmatically used modern telecommunication facilities to deliver mass education programs for the rural folk of India (Dharmakumar, 2011). 11
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Vodafone Group entered India in 2007 through an acquisition of India’s Hutchison Essar’s stake for $180 million less than the agreed price of $11.08 billion (David, 2007). The purchase of acquisition raised a dispute with the Income Tax Department as Indian Tax authorities claimed the transaction involved the purchase of assets of an Indian company. In July 2018, Vodafone India was officially merged with Idea Cellular. The merger has been approved by the Department of Telecommunication. It was completed in August 2018 and the newly merged entity’s name is Vodafone Idea Limited (Parbat & Sengupta, 2018). The company has now become India’s leading telecom service provider that provides pan India Voice and Data across 2G, 3G, and 4G platforms. With a vision of creating world-class digital experience to connect and inspire millions of Indians to build a better future, the company is developing new infrastructures to introduce newer and smarter technologies. 3.2 Transfer pricing case Vodafone Group plc has been known to get involved in a number of transfer pricing cases in Asia, Africa, even in Europe. In this case, we will be discussing about the transfer pricing case that happened after Vodafone Group plc 2007 acquisition of Hutchison Essar Teleco in which for the next 8 years since then, the Indian Income Tax department has repeatedly been all over their heads, accusing Vodafone India that they are not paying enough taxes during their acquisition of Hutchison Essar Teleco in their entrance to the Indian market. There are numerous cases. However, we will be focusing on the 2012 and 2015 financial year. In 2012, Vodafone was embroiled in a $2.5 billion tax dispute with the Indian Income Tax Department over its purchase of Hutchison Essar Telecom services six years ago. 12
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The British telecommunications conglomerate has clashed with the tax authorities repeatedly ever since the acquisition in 2007. It was being alleged by the Indian Tax authorities that the transaction involved the purchase of assets of an Indian Company, and therefore the transaction or part thereof was liable to be taxed in India (Dasgupta, 2017). The dispute on transfer pricing surfaced after the Income Tax Department issued a draft transfer pricing order in December 2011 and added Rs. 8,500 crores to Vodafone’s taxable income for the sale of the call center business.
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  • Spring '19
  • Ahmad Mutaaqin
  • The Road, Vodafone Group Plc, Vodafone India Transfer Pricing Case

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