Foster’s Australia may have to cough up a hefty amount of tax to the Income Tax department in India. A ruling by the Authority of Advanced Ruling (AAR) decreed that the company’s sale of intangible assets in the form of brand and trademark to SABMiller Plc is taxable in India. The department has valued the sale of intangible assets to SABMiller between US $81 lakh to US $89 lakh. Consequently, Foster’s Australia may have to pay 10% of this amount as taxes.
The IT department is also now independently pursuing the sale of tangible assets to SABMiller in India. Sources pointed out that the department has valued the sale of tangible assets (that includes the sale of shares) at around US $12 crore and was following up on this part of the deal with SABMiller since it was the purchaser. Notices have been issued to SABMiller over the sale of shares. As Fosters’ has exited from India, SABMiller would be pursued for paying TDS. This is similar to the Vodafone case where after Hutch exited from India, the department began pursuing the matter with Vodafone.
Sources said the department would soon get in touch with SABMiller to ascertain when Fosters’ Australia would be paying its’ tax liability. As Fosters’ Australia no longer has a physical presence in India, SABMiller could be treated as the agent for communication with Fosters’ Australia, the department indicated. SABMiller Plc had acquired Foster’s India for around US $120 million from its parent company, Foster’s Australia.