It’s fascinating and welcome that India is refusing to take tax lying down now.
I’ve just noted their aggressive, and I think appropriate, response to Vodafone’s tax abuse, which they are tackling with retrospective legislation. This is a country that will no longer tolerate tax abuse via tax havens – and good for them.
Yes, Go India!
The Permanent Court of Arbitration at the Hague has finally ruled in favour of the telecom giant Vodafone in an investment treaty arbitration (ITA) dispute against India, initiated under the India-Netherlands Bilateral Investment Treaty (BIT).
This ruling marks the culmination of almost a decade long bitter tax dispute between India and the Vodafone Group.
Vodafone argued that the imposition of tax claims through retrospective amendment, even when the final word had already been said by the Supreme Court, amounts to a violation of fair and equitable treatment (FET) promised under the India-Netherlands BIT. The India-Netherlands BIT in its Article 4.1 provides that the investors shall at all times be accorded fair and equitable treatment, which includes an obligation to ensure a stable and predictable regulatory environment.
In other words, when the Supreme Court has decided a dispute, it would be presumed that a matter has attained finality. However, circumventing the effect of the apex court’s judgment by resorting to retrospective legislation, certainly creates an unpredictable and unstable business environment. The Indian government just did that.
India now has to pay $5 million and change to Vodafone for legal bills. How much of that do we think Dickie and his chums at Tax Justice should contribute towards that?
We can, of course, look forward to more articles decrying ISDS and arbitration as they prevent governments from illegal actions.