adjustment of R8,500 crore also involving Vodafone where the tax demand could be about R2,600 crore.
The high-profile transfer pricing adjustment over the purchase of Shell India’s shares by parent Shell that hit the headlines on Monday with Shell India chairperson saying Shell plans to challenge the order “strongly” also falls in the same category. Shell officials will be meeting the DG International Taxation to discuss the matter on Friday.
Sources say the Vodafone-government discussions are centred around the format in which the negotiations are to take place – this will include putting in place a legal structure for a formal settlement. Since Vodafone believes it is on strong legal footing, sources say the telco is looking to get some relief on its other pending tax disputes if it is to pay any part of the Rs 11,200 crore tax liability. Sources say it is unlikely the negotiations can be finished before March 31, which will allow the government to take credit for the amount in the Budget.
While the finance ministry is not taking any precipitate action till a solution is found, Vodafone has agreed to not file for arbitration till the negotiation process is declared a failure.