India stiffs Vodafone with $1.7 billion tax bill

VODAFONE HAS landed itself a big bill for its acquisition of Hutchison Essar (Hutch) in India.

It seems the Indian tax man has decided that the whole deal should be subject to a capital gains tax of around $1.7 billion.

And there's now going to be drawn-out legal wranglings over who acted as an agent for whom in this particular transaction.

Vodafone's counter-attack seems to be two-pronged. First, it's going to argue that it isn't an 'agent' of Hutchison International in India.

The second prong may be more effective in that Vodafone claims that the whole deal was carried out through Mauritius, precisely to avoid just this sort of, um, complication.

But now that the Indian Income Tax men have come up with the hefty figure, they will almost certainly pursue their claim rigorously. µ