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Vodaphone Declares:
It Is Difficult To Do Business in India

TIM WORSTALL

 

 

 

The CEO of Vodafone in India has complained at an Economist seminar that it’s difficult to do business in the country.

And they do have a point to make too.

Asserting that it is difficult to do business in the country, Pieters pointed to his own company that has been waiting for a clearance from the Advance Ruling Authority before bringing in funds from the parent company to buy airwaves.

“We filed an application in December last year, but have received no answer till now,” he said, stressing that the government needs to do its job. “I have no answer, I got to know last week that the officer dealing with the file has retired,” he said.

The company also has a rather large problem with the tax authorities. They bought the local operations of Hutchison Whampoa a few years back: this created, under one interpretation of Indian law at least, a capital gains tax bill. Under that interpretation if Hutchison didn’t pay that CGT bill, then Vodafone should.

The defence against that charge was that it was actually not an Indian company bought and sold at all, but an offshore one that owned Indian assets. Thus no tax was due from anyone at all.

OK, fairly standard sort of corporate tax argument.

But the point is that Vodafone took this all the way to the Indian Supreme Court and won.

At which point the law was retrospectively changed.

That is problematic for doing business in a country where you obey the law as it is, as it is written, but if the politicians don’t like the result they try to go back in time to get the result they do want, not the one the law said at the time.

Ten months and counting in a fast moving world like mobile telecoms is simply too long.


[Courtesy: Forbes. Edited for sikhchic.com]
September 13, 2014
 

Conversation about this article

1: Kaala Singh (Punjab), September 13, 2014, 1:24 PM.

India, a place to make money? Think twice before you invest here. Everyone wants a bribe and considering umpteen licences to be obtained for the smallest of things, you won't make any money and if the Govt. changes, be ready to bribe them all over again.

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