Fosters Group, SABMiller embroiled in Indian tax dispute

Foster's Group, SABMiller embroiled in Indian tax dispute

Foster's Group faces an AUD39.5m (US$40.8m) tax charge in relation to its deal to sell the licence to Foster's lager in India to SABMiller.

Foster's said today (6 April) that it will defend itself vigorously against the charge, which is part of monies claimed by India's income tax authorities.

In 2006, Foster's sold the Indian licence on its namesake lager to SABMiller for US$120m. While Indian tax authorities have been pursuing both brewers for several years since, this is the first time that Foster's has put a figure on the possible charge.

A spokesperson for SABMiller said told just-drinks: "SABMiller can confirm that the notice of demand issued to SABMiller by the Director of Income Tax in India for unpaid tax and interest, amounting to approximately US$40m, is subject to an indemnity granted by Foster's to SABMiller in connection with the acquisition of Foster's' Indian operations in 2006."

Both Foster's and SABMiller have argued that there is no tax obligation, because the deal was settled outside of India, beyond the tax authorities' jurisdiction. SABMiller said that it is continuing to work with Foster's to defend against any tax charge. 

"Foster's is confident of the positions that were taken in relation to Indian tax," said Foster's today.