No Vodafone accord till tax law allows settlement mechanism
Interestingly, the number of tax disputes has shot up dramatically. According to finance ministry data, there was an 85% increase in transfer pricing allegations in 2011-12. While a total of R1,220 crore was the amount of such demands in 2005-06 (for cases pertaining to 2002-03), this rose to R24,111 crore in 2010-11 (for cases pertaining to 2007-08) and then to R44,532 crore in 2011-12 (for cases pertaining to 2008-09). In 2011-12, every other transaction of MNC subsidiaries led to a tax claim, up from one in four just 5 years ago.
Since Vodafone is not an existing assessee that has under-reported taxes, it cannot ask for a settlement under existing processes. But there is no other official mechanism now that allows the taxman and Vodafone to reach a settlement on the amount of tax that needs to be paid, or onwhether interest and penalties are to be waived and, if so, by how much. According to Ajay Bahl, founding partner of top corporate law firm AZB & Partners, “The
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