Dickie’s Celebrating Today!

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.

Oh.

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.

9 thoughts on “Dickie’s Celebrating Today!”

  1. Max says:
    April 3 2012 at 7:44 pm
    Didn’t the Indian Supreme Court rule that Vodafone did not owe any tax?

    Richard Murphy says:
    April 3 2012 at 7:53 pm
    Yes

    But the decision was defective – it used UK precedents incorrectly so the Indian government over ruled it in the interests of the Indian people

    That’s what retrospective taxation does – it rights wrongs

  2. “We can, of course, look forward to more articles decrying ISDS and arbitration as they prevent governments from illegal actions.”

    Its strange that international law is very important sometimes (when its a way of stopping Brexit), but its to be ignored at other times (when its a way of bashing large corporations)………..

  3. Mr Murphy,

    I sold a house five years ago. I had lived there twenty years. Under Australian tax law at the time I didn’t owe capital gains tax because it was my residence. Do I have an outstanding liability? Do I have to check daily with the Tax Office to see if my situation has been reassessed?

    That’s what retrospective taxation does – it rights wrongs

  4. Dear Mr Worstall

    India has form with respect to its attitude towards foreign investment. From a lecture by Ludwig von Mises 1958:

    “A few years ago the famous statesman Jawaharlal Nehru published a collection of his speeches. The book was published with the intention of making foreign investment in India more attractive. The Indian government is not opposed to foreign investment before it is invested. The hostility begins only when it is already invested. In this book — I am quoting literally from the book — Mr. Nehru said, “Of course, we want to socialize. But we are not opposed to private enterprise. We want to encourage in every way private enterprise. We want to promise the entrepreneurs who invest in our country, that we will not expropriate them nor socialize them for ten years, perhaps even for a longer time.” And he thought this was an invitation to come to India!”

    https://mises.org/library/foreign-capital-investment-antidote-global-inequality#comment-3555505242

    “That’s what retrospective taxation does – it rights wrongs”

    That’s what retrospective taxation does – it wrongs rights.

    Fixed it for him.

    Our own beloved government used retroactive legislation back in the day:

    https://en.wikipedia.org/wiki/Burmah_Oil_Co_Ltd_v_Lord_Advocate

    DP

  5. Anyone who has followed this case knows that the right decision has been reached (again) and that the Indian authorities have been taking the piss. They had no leg to stand on and retrospective legislation isn’t the answer. Unless you’re Shitprof Murphy, head of the mental defective league.

  6. Despite being the largest motorbike market int he World I was reading that some manufacturers were pulling out of India quoting that the high tax regime meant it wasn’t worth the risk of trying to break into the market when they are 2 big incumbents already and they were better off signing up a importer/distributor.

  7. Hedge funds in the 00’s were doing sweet bonus arrangements with Caymans via Cyprus for non-domiciled employees. All perfectly legal. Ten years later those employees, now ex-employees, residents in whatever country, started getting blackmail-letters from the HMRC, retrospective changes in law you see. I was lucky to have had a solid upstanding employer but apparently many were thrown to the wolves when the fund management companies had been dissolved or simply didn’t exist anymore or if they did exist didn’t settle with the HMRC.

  8. And all because the UK Bribery Act prevents business SOP in India.
    1946 – wasn’t the retrospective nature of some of the Reich laws the reason some of them hanged?

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