Ritchie on Vodafone India

We get the great man\’s words:

This was a transaction relating to Indian assets that India wanted to tax, and thought it could tax. But it was recorded ‘elsewhere’ in a tax haven structure. And the result is that the legal form of recording it ‘elsewhere’ has meant that Inida’s laws have been subverted and tax is not due.

Yes, that\’s right. A ruling on the law from the Supreme Court is subversion of the law.

Rather than, as most of us would take it, a declaration of what the law actually is.

16 thoughts on “Ritchie on Vodafone India”

  1. The Great Man is a genius. Not only does he know everything about economics and English law, he’s also an expert on Indian tax law!

    Is there anything he doesn’t know? Why is this man scribbling blog entries in Norfolk when he could be running the world as a benign and loved despot?

  2. I’m all on board with the Ritchie-is-both-a-menace-and-a-muppet meme, I also understand the principle contended for here: that a constitutional court’s utterances are by definition “the law”. Trouble is, even constitutional courts make (sorry “divine”) bad law all the time. Read Roe v Wade. I read it because Robert Bork claimed it contained no legal reasoning. Know what? It doesn’t. Seriously. The judgment in Roe v Wade’s tres interessant, but it contains no law.

    Ritchie’s a flatulent fool, and I yield to none in my admiration of Worstall for pointing it out, but arguments from the infallibility of constitutional courts won’t do it

  3. But in the context of what the law means, they are infallible in the papal sense. Roe vs Wade is the law of the land regardless of what you or Robert Bork think of it. Bad law is still law.

  4. Matthew, I agree that bad law is bad law is bad law, but what is contended for by the posting is that law is law is law if made (sorry, “divined”) by a constitutional supreme court. Strictly speaking, that’s a correct description of the position, no matter what we may think of the judgements in question.

    But what if the judgments in question are pants on stilts?

    Roe v wade may be the law of the land. It’s also a bloody good read. But it’s pants on stilts.

    Which puts me, for present and I trust limited, purposes, in the same camp as Ritchie. And, less controversially, Bork

  5. Btw, am expressing no view as to the objective rectitude of the Indian supreme court’s judgment (busy trying ona new pith helmet and swishing me whangee, innit)

  6. Doesn’t matter if the judgements are terrible. They’re still law until overturned by Parliament or a subsequent court ruling. That’s how the common law system works. Your only recourse is to work around the ruling or amend the source of the ruling. If America really wanted to be an abortion free zone they could amend it into their constitution and Roe vs Wade would be a historical footnote.

  7. Richie’s position is simply indefensible.

    Vodaphone was buying a company. The seller made a capital gain on its sale. There is clearly scope for argument whether whether India can tax the seller on that capital gain, given the seller was a tax haven entity holding Indian property (I know little about Indian tax and so can’t comment on the technicalities). But the idea Vodaphone could be taxed on the capital gain is bizarre – it just wasn’t Vodaphone’s gain.

    Note that Vodaphone acquired the business using a Dutch company, not a tax haven company… but the position taken by the Indian tax authorities would have applied equally if Vodaphone had used a UK acquisition company.

  8. Except, Dan, that Indian tax law requires the seller to hold on to the “capital gains tax” part of the selling price and remit it to the authorities. Really just PAYE for CGT.

    So the core question was, was this a taxable Indian transaction? The Supreme Court said no but Ritchie is, at least, sticking to his basic point that transactions should be taxed where they actually occur. And this was the sale of a large part of what is undoubtedly an Indian business. And he declares, with all the authority and repetition that he can muster, that the legal use of tax havens and shell companies is impermissible disguising of the transaction. And therefore, tax evasion.

    Of course, he then goes completely inconsistent with regards to UK taxation of Vodaphone in Germany but, hey, the hobgoblin of small minds 😉

  9. Does the prat not realise that he is being completely inconsistent re territorial tax? If transactions are taxed where they occur, which is what he wants, why is so against the UK adopting a territorial tax system ?

    The bloke is an utter moron.

  10. Stuart (#13), at heart his logic seems to be imperialist.

    Transactions should be taxed wherever they occur, but the Great White Mother should also tax her children’s activities all across the world.

    Put like that, it almost starts sounding good.

  11. I’ve just realised that my comment at #12 is bollocks – it is the “buyer” who is required to hang on to the CGT component of the purchase price. I.e. Vodaphone.

    Which brings the following Q to mind – HTF are they supposed to know what the correct withholding is?

  12. SE – the Indian system of tax law gets quite close to the Ritchie ideal – everything is taxable at 100% unless there is an explicit allowance.

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